Puvo, Inc, Manufactures a Single Product in Which Variable Manufacturing Overhead

question 196

Multiple Choice

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 labor efficiency variance for March is:

• A) $3,040 U
• B) $3,685 U
• C) $3,685 F
• D) $3,040 F

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