Puvo, Incorporated, Manufactures a Single Product in Which Variable Manufacturing

question 358

Multiple Choice

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: 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 materials quantity variance for March is:

• A) $1,116 Favorable
• B) $1,302 Favorable
• C) $1,302 Unfavorable
• D) $1,116 Unfavorable

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Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure a company's transactions are mathematically correct.

Debit Column

The left-hand column in an accounting journal or ledger where debits are recorded, indicating an increase in assets or expenses or a decrease in liabilities, equity, or income.

Credit Column

The section of a financial statement or ledger where increases in liabilities, equity, and revenue or decreases in assets and expenses are recorded.

Journalized Transactions

Recording financial transactions in a journal as part of the double-entry bookkeeping system.