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 QuantityStandard Price or RateStandard CostDirect materials 5.8pounds$0.60per pound$3.48Direct labor 0.5hours$33.50per hour$16.75Variable manufacturing overhead 0.5hours$8.50per 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 efficiency variance for March is:

Labor Efficiency Variance:-It is the difference between the actual hours taken for producing goods…

Answered: Puvo, Inc., manufactures a single…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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 efficiency variance for March is:

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