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:
|Standard Quantity||Standard Price or Rate||Standard Cost|
|Direct materials||1.5||pounds||$||7.50||per pound||$||11.25|
|Direct labor||0.6||hours||$||24.00||per hour||$||14.40|
|Variable manufacturing overhead||0.6||hours||$||5.75||per hour||$||3.45|
During March, the following activity was recorded by the company:
The company produced 6,600 units during the month.
A total of 13,400 pounds of material were purchased at a cost of $37,520.
There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,680 pounds of material remained in the warehouse.
During March, 4,160 direct labor-hours were worked at a rate of $24.50 per hour.
Variable manufacturing overhead costs during March totaled $14,552.
The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for March is: