Puvo, Inc., manufactures a single product in which variable manufacturing overhe

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 cost system and has established the following standards for one unit of product: Standard Price or Standard Standard Quantity 2.0 pounds 0.5 hours 0.5 hours Rate Cost Direct materials Direct labor Variable manufacturing overhead $ 7.75 per pound $15.50 $25.00 per hour $ 6.00 per hour Skipped $12.50 $ 3.00 Print During March, the following activity was recorded by the company: The company produced 6,800 units during the month. A total of 17,100 pounds of material were purchased at a cost of $47,880 There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,420 pounds of material remained in the warehouse During March, 3,600 direct labor-hours were worked at a rate of $25.50 per hour Variable manufacturing overhead costs during March totaled $11,000. The direct materials purchases variance is computed when the materials are purchased The materials quantity variance for March is:

Explanation / Answer

Materials used = 17100-3420= 13680 The materials quantity variance = 7.75*(13680-6800*2)= $620 Unfavorable

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