Required information The Foundational 15 [LO10-1, LO10-2, LO10-3) [The following

Question

Required information The Foundational 15 [LO10-1, LO10-2, LO10-3) [The following information applies to the questions displayed below. Preble Company manufactures one product. Its variable manufacturing overhead is applied to production Part 11 of 15 based on direct labor-hours and its standard cost card per unit is as follows: points Skippe Direct materials: 5 pounds at $9 per pound Direct labor: 3 hours at $14 per hour Variable overhead: 3 hours at $9 per hour Total standard cost per unit 45 42 27 $114 eBook Print The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,800 units and incurred the following costs Reference a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct laborers worked 65,000 hours at a rate of $15 per hour c. Total variable manufacturing overhead for the month was $612,300. Foundational 10-11 11. What is the labor spending variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values. Do not round intermediate calculations.) abor spending variance

Explanation / Answer

Spending variance                          = $ 66,600 F

Labor rate variance = AH (AR – SR)

= 65,000 hours ($15 per hour – $14 per hour)

= $ 65,000 U

Labor efficiency variance = SR (AH – SH)

= $14 per hour (65,000 hours – 74,400 hours***)

= $ 1,31, 600 F

Labor rate variance                          = $ 65,000 U     

Labor efficiency variance               = $ 1,31, 600 F

Spending variance                          = $ 66,600 F

****24800 Units x 3 hours per unit = 74,400 hours

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