Puvo, Incorporated, manufactures a single product in which variable manufacturing overhead is assigned on the...
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Accounting
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
Standard Price or Rate
Standard Cost
Direct materials
7.0
pounds
$ .80
per pound
$ 5.60
Direct labor
0.7
hours
$ 45.50
per hour
$ 31.85
Variable manufacturing overhead
0.7
hours
$ 9.70
per hour
$ 6.79
During March, the following activity was recorded by the company:
The company produced 3,600 units during the month.
A total of 20,600 pounds of material were purchased at a cost of $14,780.
There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,820 pounds of material remained in the warehouse.
During March, 1,210 direct labor-hours were worked at a rate of $42.50 per hour.
Variable manufacturing overhead costs during March totaled $15,261.
The direct materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for March is:
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