Question

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: Direct materials Direct labor Variable manufacturing overhead Standard Quantity 2.0 pounds 0.5 hours 0.5 hours Standard Price or Standard Rate Cost $ 4.75 per pound $9.50 $13.00 per hour $6.50 $ 3.00 per hour $1.50 During March, the following activity was recorded by the company: . The company produced 4,400 units during the month. • A total of 12,300 pounds of material were purchased at a cost of $34,440. • There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,460 pounds of material remained in the warehouse. . During March, 2.400 direct labor-hours were worked at a rate of $13.50 per hour. • Variable manufacturing overhead costs during March totaled $3,800. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for March is: Multiple Choice < Prev 10 of 21 !!! Next >

Answer 1

Answer- The materials quantity variance for March is = $4940 U.

Explanation-Material Quantity variance = (Standard Quantity- Actual Quantity used)*Standard price

={8800 pounds – (12300 pounds-2460 pounds)*$4.75 per pound

=(8800 pounds – 9840 pounds)*$4.75 per pound

= $4940 Unfavorable

Where:-

Standard Quantity = No. of pounds per unit*Actual output

                               = 2.0 pounds per unit *4400 units = 8800 pounds