Homework SoursePreble Company manufactures one product Its variable manufac
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:
Direct material: 4 pounds at $10.00 per pound
$
40.00
Direct labor: 2 hours at $15.00 per hour
30.00
Variable overhead: 2 hours at $9.00 per hour
18.00
Total standard variable cost per unit
$
88.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per Month
Variable Cost
per Unit Sold
Advertising
$
240,000
Sales salaries and commissions
$
130,000
$
13.00
Shipping expenses
$
3.00
The planning budget for March was based on producing and selling 29,000 units. However, during March the company
actually produced and sold 34,000 units and incurred the following costs:
a.
Purchased 160,000 pounds of raw materials at a cost of $8.50 per pound. All of this material was used in production.
b.
Direct-laborers worked 58,000 hours at a rate of $16.00 per hour.
c.
Total variable manufacturing overhead for the month was $564,040.
d.
Total advertising, sales salaries and commissions, and shipping expenses were $246,000, $563,760, and $119,000,
respectively.
Questions:
What variable manufacturing overhead cost would be included in the company’s flexible budget for March?
Variable manufacturing overhead cost=
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.).)
Variable overhead efficiency variance=
Favorable or Unfavorable?
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.).)
Variable overhead rate variance=
Favorable or Unfavorable?
What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in
the company’s flexible budget for March?
Preble Company
Flexible Budget
For the Month Ended March 31
Units sold (q) 34,000
Expenses:
Advertising
Sales salaries and commissions
Shipping expenses
Total
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.).)
Spending variance=
Favorable or Unfavorable?
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.).)
Spending variance=
Favorable or Unfavorable?
What is the spending variance related to shipping expenses? (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.).)
Spending variance=
Favorable or Unfavorable?
| 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: |
Solution
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. 1. Variable manufacturing overhead cost= 34000*2*9 612000 2. Variable overhead efficiency variance (AH-SH)*SR (58000-68000)*9 90000 F Standard Hour for Actual Output 34000*2 68000 3. Variable overhead rate variance= (SR-AR)*AH (SR*AH)-(AR*AH) (9*58000)-564040 42040 U 4. Spending variance Advertising 246000-240000 6000 U Spending variance Sales Commission 563760-572000 8240 F Flexible Budget for Sales Commission (13*34000)+130000 572000 Spending variance Shipping 119000-102000 17000 U Flexible Budget for Shipping 3*34000 102000
