Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2560083 • 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 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:
Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
Direct laborers worked 55,000 hours at a rate of $15.00 per hour.
Total variable manufacturing overhead for the month was $280,500.
1. Raw Materials cost for the company's planning budget for March= $1,000,000
2. Raw materials cost included in the company's flexible budget for March= $1,200,000
3. Materials price variance for March= $80,000 F
5. If Preble had purchased 170,000 pounds of materials at $7.50 per pound and used 160,000 pounds in production, what would be the materials price 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.)
6. If Preble had purchased 170,000 pounds of materials at $7.50 per pound and used 160,000 pounds in production, what would be the materials quantity variance for March= $80,000 U
7. What direct labor cost would be included in the company’s planning budget for March?
8. What direct labor cost would be included in the company’s flexible budget for March?
9. What is the labor rate 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.)
10. What is the labor efficiency 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.)
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.)
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? (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.)
15. What is the variable overhead efficiency 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.)
Direct materials: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00 Total standard cost per unit $ 78.00Explanation / Answer
Standard Cost Sheet PU Component Qty Rate Price Direct Material 5 8.00 40 Direct Labor 2 14.00 28 Variable OH 2 5.00 10 78 Actual Cost Component Qty Rate Price Direct Material 160000 7.50 1200000 Direct Labor 55000 15.00 825000 Variable OH 55000 5.10 280500 Total 2305500 Revised Standard Cost (30000) Component Qty Rate Price Material 150000 8.00 1200000 Labor 60000 14.00 840000 VOH 60000 5.00 300000 Total 2340000 Q5 Purchase: 170000, Used:160000 Material Price Variance: (SP-AP)Actual Qty Consumed 80000 F Q6 Purchase: 170000, Used:160000 Material Usage Variance: (SQ-AQ)SP -80000 A Q7 Direct Labor Cost in Planning (Budgeted Prodn*Labour Hour PU* Rate PH) 700000 Q8 Direct Labor Cost in Flexible (Actual Prodn*Labour Hour PU* Rate PH) 840000 Q9 Labor Price Variance: (SP-AP)Actual Hours -55000 A Q10 Labor Eff Variance: (SH-AH)SP 70000 F Q11 All for Actual Labor Spending Variance: (Standard Cost-Actual Cost) 15000 F Q12 Variable Cost in Planning (Budgeted Prodn*Labour Hour PU* Rate PH) 250000 Q13 Variable Cost in Flexible (Actual Prodn*Labour Hour PU* Rate PH) 300000 Q14 Variable OHPrice Variance: (SP-AP)Actual Hours -5500 A Q15 Variable OH Eff Variance: (SH-AH)SP 25000 F
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