IThe following information applies to the questions displayed below] Preble Comp

Question

IThe following information applies to the questions displayed below] Preble Company manufactures one product. Its varlable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materlal: 4 pounds at $8.00 per pound Direct labor: 2 hours at $12.00 per hour Varlable overhead: 2 hours at $6.00 per hour 32.00 24.00 12.00 Total standard varlable cost per unlt 68.00 The company also establishe the following cost formulas for its selling expenses: Variable Cost per Unit Sold Fixed Cost per Month $320000$10.00 Advertising Sales salaries and commissions Shipping expenses $120,000 $ 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 37000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production. b. Direct-aborers worked 66.000 hours at a rate of $13.00 per hour c. Total variable manufacturing overhead for the month was $405,000 d. Total advertising, sales salaries and commissions, and shipping expenses were $321,000, $405.240, and $127000, respectively

Explanation / Answer

1) Raw materials in flexible budget actual production *standard cost per unit 37000*32 1184000 2) Materials quantity variance (actual qty used - standard qty allowed)*standard rate (160,000    - 37000*4)*8 96000 U 3) Materials price variance (actual price - standard price)* actual qty used ((7.40 - 8)*160000 96000 F 4) Materials quantity variance (actual qty used - standard qty allowed)*standard rate (160,000    - 37000*4)*8 96000 U

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