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: Direct material: 6 pounds at $8.00 per pound$ 48.00Direct labor: 4 hours at $13 per hour52.00Variable overhead: 4 hours at $5 per hour20.00Total standard variable cost per unit$ 120.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per MonthVariable Cost per Unit SoldAdvertising$ 380,000 Sales salaries and commissions$ 460,000$ 30.00Shipping expenses $ 21.00 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.Direct-laborers worked 73,000 hours at a rate of $14.00 per hour.Total variable manufacturing overhead for the month was $427,050.Total advertising, sales salaries and commissions, and shipping expenses were $386,000, $545,000, and $295,000, respectively.5. If Preble had purchased 188,000 pounds of materials at $7.20 per pound and used 170,000 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 the amount as a positive value.) site:www.bartleby.com

Answer 1

Labor-Hours And Its Standard Cost Card Per Unit Is As Follows:

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 materials: 5 pounds at $9 per pound $ 45

Direct labor: 3 hours at $14 per hour 42

Variable overhead: 3 hours at $8 per hour 24

Total standard cost per unit $ 111

The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs:

a.

Purchased 180,000 pounds of raw materials at a cost of $8.50 per pound. All of this material was used in production.

b.

Direct laborers worked 69,000 hours at a rate of $15 per hour.

c. Total variable manufacturing overhead for the month was $565,200.