Question 24 Puvo, Inc., manufactures a single product in which variable manufact

Question

Question 24

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:

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 variable overhead rate variance for March is:

$4,769 F

$5,120 U

$5,120 F

$4,769 U

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

Explanation / Answer

Variable overhead rate variance = 14061-(1090*8.5)= 4796 U

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