Question
Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard
Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product:
Standard Quantity | Standard Price or Rate | Standard Cost | |||||||
Direct materials | 5.8 | pounds | $ | 0.60 | per pound | $ | 3.48 | ||
Direct labor | 0.5 | hours | $ | 33.50 | per hour | $ | 16.75 | ||
Variable manufacturing overhead | 0.5 | hours | $ | 8.50 | per hour | $ | 4.25 | ||
During March, the following activity was recorded by the company:
- The company produced 2,400 units during the month.
- A total of 19,400 pounds of material were purchased at a cost of $13,580.
- There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,620 pounds of material remained in the warehouse.
- During March, 1,090 direct labor-hours were worked at a rate of $30.50 per hour.
- Variable manufacturing overhead costs during March totaled $14,061.
The direct materials purchases variance is computed when the materials are purchased.
The labor rate variance for March is:
-
$4,120 F
-
$3,270 F
-
$4,120 U
-
$3,270 U
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output | 8.1 | hours | |
Standard variable overhead rate | $ | 14.85 | per hour |
The following data pertain to operations for the last month:
Actual hours | 8,600 | hours | |
Actual total variable manufacturing overhead cost | $ | 130,720 | |
Actual output | 1,000 | units | |
What is the variable overhead rate variance for the month?
-
$3,010 F
-
$10,435 U
-
$10,435 F
-
$3,010 U
Dirickson Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.
Inputs | Standard Quantity or Hours per Unit of Output | Standard Price or Rate | |||||||||
Direct materials | 7.6 | ounces | $ | 9.40 | per ounce | ||||||
Direct labor | 0.10 | hours | $ | 18.00 | per hour | ||||||
Variable manufacturing overhead | 0.10 | hours | $ | 5.30 | per hour | ||||||
The company has reported the following actual results for the product for July:
Actual output | 7,600 | units | |
Raw materials purchased | 63,000 | ounces | |
Actual cost of raw materials purchased | $ | 541,800 | |
Raw materials used in production | 57,750 | ounces | |
Actual direct labor-hours | 820 | hours | |
Actual direct labor cost | $ | 16,072 | |
Actual variable overhead cost | $ | 4,592 | |
The labor rate variance for the month is closest to:
Multiple Choice
-
$1,312 U
-
$1,216 F
-
$1,216 U
-
$1,312 F
Prowse Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.
Fixed Element per Month | Variable Element per Well Serviced | ||||
Revenue | $ | 4,000 | |||
Employee salaries and wages | $ | 43,800 | $ | 1,000 | |
Servicing materials | $ | 600 | |||
Other expenses | $ | 38,200 | |||
A total of 42 wells were actually serviced during October.
The Employee salaries and wages in the flexible budget for October would have been closest to:
Multiple Choice
-
$85,800
-
$80,800
-
$74,000
-
$84,000
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