Question

TB MC Qu. 9-336 Puvo, Inc., manufactures a single product in which ...

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 6.10 pounds $0.90 per pound $5.49
Direct labor 0.50 hours $36.50 per hour $18.25
Variable manufacturing
overhead 0.50 hours $8.80 per hour $4.40
During March, the following activity was recorded by the company:
• The company produced 3,500 units during the month.
• A total of 20,500 pounds of material were purchased at a cost of $14,680.
• There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,720 pounds of material remained in the warehouse.
• During March, 1,200 direct labor-hours were worked at a rate of $41.50 per hour.
• Variable manufacturing overhead costs during March totaled $15,161.
The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for March is:_______.
a. $3,641 F.
b. $4,355 U.
c. $4,355 F.
d. $3,641 U.

Answer 1

Variable manufacturing overhead rate variance= $4,596 unfavorable

Step-by-step explanation:

Giving the following information:

Variable manufacturing overhead 0.50 hours $8.80 per hour $4.40

Actual direct labor hours= 1,200

Variable manufacturing overhead costs during March totaled $15,161.

To calculate the variable overhead rate variance, we need to use the following formula:

Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity

Actual rate= 15,161/1,200= $12.63

Variable manufacturing overhead rate variance= (8.8 - 12.63)*1,200

Variable manufacturing overhead rate variance= $4,596 unfavorable