IThe following Information apples to the questions displayed belowj Preble Compa

Question

IThe following Information apples to the questions displayed belowj Preble Company manufactures one product. Its varlable manufacturing overhead is applled to production based on direct labor-hours and its standard cost card per unlt is as follows: Direct materlal: 8 pounds at $10.00 per pound Direct labor: 6 hours at $19.00 per hour Varlable overhead: 6 hours at $700 per hour 80.00 114.00 42.00 Total standard varlable cost per unit $236.00 The company also established the following cost formulas for Its selling expenses: FIxed Cost per Month $290,000 $340,000 Varlable Cost per Unit Sold Advertising Sales salarles and commissions Shlpping expenses $18.00 $5.00 The planning budget for March was based on producing and selling 15,000 units. However, during March the company actually produced and sold 17,000 unlts and Incurred the following costs a. Purchased 170,000 pounds of raw materials at a cost of $8.00 per pound. All of this material was used In b. c. d. production. Direct-laborers worked 90,000 hours at a rate of $21.00 per hour Total varlable manufacturing overhead for the month was $631,250. Total advertising, sales salarles and commissions, and shlpping expenses were $294,000, $630,900, and $124,000, respectively

Explanation / Answer

1 Raw materials cost=17000*80= 1360000 2 Materials quantity variance=10*(170000-17000*8)= 340000 U 3 Materials price variance=170000*(8-10)= 340000 F 4 Materials quantity variance=10*(170000-17000*8)= 340000 U

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