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

question 253

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 variable overhead rate variance for March is:

• A) $4,796 Favorable
• B) $5,120 Unfavorable
• C) $5,120 Favorable
• D) $4,796 Unfavorable

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