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:Standard Quantity Standard Priceor Rate Standard CostDirect materials 1.5 pounds $ 5.25 per pound $ 7.88Direct labor 0.5 hours $ 15.00 per hour $ 7.50Variable manufacturing overhead 0.5 hours $ 3.50 per hour $ 1.75During March, the following activity was recorded by the company:The company produced 4,800 units during the month.A total of 10,700 pounds of material were purchased at a cost of $29,960.There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,140 pounds of material remained in the warehouse.During March, 2,600 direct labor-hours were worked at a rate of $15.50 per hour.Variable manufacturing overhead costs during March totaled $4,750.The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for March is:

Answer 1

$7,140 unfavorable

Step-by-step explanation:

The computation of the materials quantity variance for March is shown below;

We know that

Material Quantity Variance = Standard rate × ( Standard Quantity for actual production - Actual Quantity Used)

=$5.25 × ([4,800 units × 1.5 pounds per unit] - (10,700 - 2,140)

=$5.25 × (7,200 pounds - 8,560 pounds)

= $7,140 unfavorable