Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2561361 • 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 company also established the following cost formulas for its selling expenses:
The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 25,500 units and incurred the following costs:
Purchased 170,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.
Total advertising, sales salaries and commissions, and shipping expenses were $389,000, $350,020, and $133,000, respectively.
What is the materials quantity 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.).)
What is 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.).)
What is the direct labor efficiency 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.).)
What is the direct labor rate 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.).)
What variable manufacturing overhead cost would be included in the company’s flexible budget for March?
What is the variable overhead efficiency 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.).)
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.).)
What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
Preble CompanyFlexible BudgetFor the Month Ended March 31Units sold (q)25,500Expenses:AdvertisingSales salaries and commissionsShipping expensesTotal$0
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.).)
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.).)
[The following information applies to the questions displayed below.]Explanation / Answer
1)Standard material quantity :Actual units *quantity per unit
= 25500*6
= 153000
Raw material to be included in flexible budget : 153000*8= 1224000
2)Material quantity variance =SR [AQ-SQ]
= 8[170000-153000]
= 8* 17000
= $ 136000 U
3)Material price variance = AQ[AR-SR]
= 170000[7.2-8]
= 170000*-.8
= $ - 136000 F
6)Standard hours : 25500*4=102000
Standard labor cost to be included in flexible budget = 102000*12= 1224000
7)Labor efficiency variance = SR[AH-SH]
= 12[86000-102000]
=12*-16000
= - 192000 F
8)Labor rate variance =AH[AR-SR]
= 86000[13-12]
= 86000*1
=86000 U
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