Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2483134 • 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:
Direct material: 5 lds at $10.00 per lbs
$
50.00
Direct labor: 2 hours at $13.00 per hour
26.00
Variable overhead: 2 hrs at $8.00 per hr
16.00
Total standard variable cost per unit
$
92.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per Month
Variable Cost
per Unit Sold
Advertising
$
400,000
Sales salaries and commissions
$
130,000
$
11.00
Shipping expenses
$
3.00
The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,600 units and incurred the following costs:
a.
Purchased 200,000 pounds of raw materials at a cost of $9.40 per pound. All of this material was used in production.
b.
Direct-laborers worked 65,000 hours at a rate of $14.00 per hour.
c.
Total variable manufacturing overhead for the month was $525,000.
d.
Total advertising, sales salaries and commissions, and shipping expenses were $416,000, $525,200, and $135,000, respectively.
5. If Preble had purchased 210,000 pounds of materials at $9.40 per pound and used 200,000 pounds in production, what would be the materials price variance for March? (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.).)
11. What is the variable overhead rate variance for March? (Do not round intermediate calculations.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.).)
13. 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.).)
14. 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.).)
15. 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.).)
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:
Explanation / Answer
5) quantity price Cost Standard cost of producing 1 unit 5 lbs 10 per lbs 50.00 Standard cost of producing 37600 units 188000.00 10 1880000 Acctual cost of producing 37600 units 200000 9.4 1880000 Actual quantity used in production is taken to calculate variances As it is the best measure of variance Material Price Variance = Actual quantity ( Actual price - standard price) = 200000 (9.40 - 10) = 200000 x -0.6 = 120000 Favourable
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