Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2438286 • Letter: P
Question
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
The company also established the following cost formulas for its selling expenses:
The planning budget for March was based on producing and selling 21,000 units. However, during March the company actually produced and sold 26,000 units and incurred the following costs:
Purchased 160,000 pounds of raw materials at a cost of $6.50 per pound. All of this material was used in production.
Total advertising, sales salaries and commissions, and shipping expenses were $364,000, $655,520, and $130,000, respectively.
What is the spending variance related to advertising? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).) Spending variance?
What is the spending variance related to sales salaries and commissions? (Input the amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).) Spending variance?
What is the spending variance related to shipping expenses? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).) Spending variance?
Explanation / Answer
Spending variance report Calculation Flexible Budget Actual Results Spending variance Units Sold (q) 26,000 26,000 Expenses: 13) Advertising 350,000 364,000 14,000 U 14)Sales salaries and commissions (250,000+16 q) 666,000 655,520 10,480 F 15)Shipping expenses 4 q 104,000 130,000 26,000 U
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