Question 7 (5 points)
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:
Direct materials
Direct labor
Variable manufacturing overhead
Standard
Quantity
5.8 pounds
0.5 hours
0.5 hours
Standard Price or Ra
$ 0.60 per pr
$ 33.50 per ho
$ 8.50 per ho
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 variable overhead efficiency variance for March is:
$1,060 F
$1,060 U
$935 U
$935 F
