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 5.8 pounds 0.5 hours Direct materials Direct labor 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. Multiple Choice • 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 materials quantity variance for March is: OOOO $1,302 U $1,302 F O $1.116 U Standard Price or Rate $ 0.60 per pound $ 33.50 per hour. $8.50 per hour. $1,116 F Standard Cost $ 3.48 $16.75 $ 4.25
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 5.8 pounds 0.5 hours Direct materials Direct labor 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. Multiple Choice • 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 materials quantity variance for March is: OOOO $1,302 U $1,302 F O $1.116 U Standard Price or Rate $ 0.60 per pound $ 33.50 per hour. $8.50 per hour. $1,116 F Standard Cost $ 3.48 $16.75 $ 4.25
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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
5.8 pounds
0.5 hours
0.5 hours
Direct materials
Direct labor
Variable manufacturing overhead
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.
Multiple Choice
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 materials quantity variance for March is:
O
O
$1,302 U
$1,302 F
$1,116 U
Standard Price or Rate
$ 0.60 per pound
$33.50 per hour.
$8.50 per hour.
$1,116 F
Standard Cost
$ 3.48
$16.75
$4.25
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