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 Standard Cost Quantity 5.8 pounds Standard Price or Rate $ 0.60 per pound $ 33.50 per hour $ 8.50 per hour $ 3.48 $ 16.75 $ 4.25 Direct materials Direct labor 0.5 hours Variable manufacturing overhead 0.5 hours 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 efficiency variance for March is:

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 Standard Cost Quantity 5.8 pounds Standard Price or Rate $ 0.60 per pound $ 33.50 per hour $ 8.50 per hour $ 3.48 $ 16.75 $ 4.25 Direct materials Direct labor 0.5 hours Variable manufacturing overhead 0.5 hours 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 efficiency variance for March is:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rardin Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 7.4 ounces Direct labor 0.3 hours Variable overhead 0.3 hours The company reported the following results concerning this product in July. Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases Actual direct labor cost Actual variable overhead cost The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required: b. Compute the materials price variance. Do not indicate whether Favorable or Unfavorable. $8.00 per ounce $16.00 per hour $7.00 per hour 2,200 units 16,420 ounces 17,900 ounces 720 hours $141,410 $12,528 $5,112
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