Question
Puvo, Incorporated, 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, Incorporated, 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 6.00 pounds $ 0.80 per pound $ 4.80 Direct labor 0.60 hours $ 35.50 per hour $ 21.30 Variable manufacturing overhead 0.60 hours $ 8.70 per hour $ 5.22 During March, the following activity was recorded by the company: The company produced 2,600 units during the month. A total of 19,600 pounds of material were purchased at a cost of $13,780. There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,820 pounds of material remained in the warehouse. During March, 1,110 direct labor-hours were worked at a rate of $32.50 per hour. Variable manufacturing overhead costs during March totaled $14,261. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for March is:
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