Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2463967 • 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 planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,000 units and incurred the following costs:
Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production.
Direct laborers worked 67,000 hours at a rate of $17 per hour.
Total variable manufacturing overhead for the month was $422,100.
12)What variable manufacturing overhead cost would be included in the company’s planning budget for March?
13)What variable manufacturing overhead cost would be included in the company’s flexible budget for March?
14)What is the variable overhead rate variance for March?
15)What is the variable overhead efficiency variance for March?
Direct materials: 4 pounds at $8 per pound $ 32 Direct labor: 2 hours at $16 per hour 32 Variable overhead: 2 hours at $6 per hour 12 Total standard cost per unit $ 76Explanation / Answer
12) The variable manufacturing overhead cost that would be included in the company's planning budget for March =
$ (32,000 x 2 x 6) = $ 384,000
13) The variable manufacturing overhead cost that would be included in the company's flexible budget for March =
$ ( 37,000 x 2 x 6) = $ 444,000
14) Variable overhead rate variance for March = ( Standard rate per hour - Actual rate per hour) x Actual hours worked = ( 6 - 6.3) x 67,000 = $ 20,100 U
15) Variable overhead efficiency variance for March = ( Standard hours for actual output - Actual hours worked) x Standard rate per hour = ( 74,000 - 67,000 ) x 6 = $ 42,000 F
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.