Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-hours and its standard cost card per unit is as follows:
Direct material: 5 pounds at $9.00 per pound
$
45.00
Direct labor: 3 hours at $18.00 per hour
54.00
Variable overhead: 3 hours at $9.00 per hour
27.00
Total standard variable cost per unit
$
126.00
The company also established the following cost formulas for itsselling expenses:
Fixed Cost per Month
Variable Cost
per Unit Sold
Advertising
$
300,000
Sales salaries and commissions
$
220,000
$
16.00
Shipping expenses
$
4.00
The planning budget for March was based on producing and selling20,000 units. However, during March the company actually producedand sold 24,800 units and incurred the following costs:
a.
Purchased 155,000 pounds of raw materials at a cost of $7.20 perpound. All of this material was used in production.
b.
Direct-laborers worked 68,000 hours at a rate of $19.00 perhour.
c.
Total variable manufacturing overhead for the month was$615,000.
d.
Total advertising, sales salaries and commissions, and shippingexpenses were $308,000, $614,720, and $106,000, respectively.
Questions:
What is the variable overhead rate variance for March?
What amounts of advertising, sales salaries and commissions, andshipping expenses would be included in the companyâs flexiblebudget for March?
Preble Company
Flexible Budget
For the Month Ended March 31
Units sold (q)
24,800
Expenses:
Advertising
Sales salaries and commissions
Shipping expenses
Total
What is the spending variance related to advertising?
What is the spending variance related to sales salaries andcommissions?
What is the spending variance related to shipping expenses?
Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-hours and its standard cost card per unit is as follows: |
Direct material: 5 pounds at $9.00 per pound | $ | 45.00 |
Direct labor: 3 hours at $18.00 per hour | 54.00 | |
Variable overhead: 3 hours at $9.00 per hour | 27.00 | |
Total standard variable cost per unit | $ | 126.00 |
The company also established the following cost formulas for itsselling expenses: |
Fixed Cost per Month | Variable Cost | |||||
Advertising | $ | 300,000 | ||||
Sales salaries and commissions | $ | 220,000 | $ | 16.00 | ||
Shipping expenses | $ | 4.00 | ||||
The planning budget for March was based on producing and selling20,000 units. However, during March the company actually producedand sold 24,800 units and incurred the following costs: |
a. | Purchased 155,000 pounds of raw materials at a cost of $7.20 perpound. All of this material was used in production. |
b. | Direct-laborers worked 68,000 hours at a rate of $19.00 perhour. |
c. | Total variable manufacturing overhead for the month was$615,000. |
d. | Total advertising, sales salaries and commissions, and shippingexpenses were $308,000, $614,720, and $106,000, respectively. |
Questions:
What is the variable overhead rate variance for March?
| What amounts of advertising, sales salaries and commissions, andshipping expenses would be included in the companyâs flexiblebudget for March?
| ||||||||||||||||||||||
What is the spending variance related to advertising?
What is the spending variance related to sales salaries andcommissions?
What is the spending variance related to shipping expenses?
Related questions
Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-hours and its standard cost card per unit is as follows:
| Direct material: 5 pounds at $10.00 per pound | $ | 50.00 |
| Direct labor: 3 hours at $17.00 per hour | 51.00 | |
| Variable overhead: 3 hours at $6.00 per hour | 18.00 | |
| Total standard variable cost per unit | $ | 119.00 |
The company also established the following cost formulas for itsselling expenses: |
| Fixed Cost per Month | Variable Cost per Unit Sold | |||||
| Advertising | $ | 330,000 | ||||
| Sales salaries and commissions | $ | 130,000 | $ | 15.00 | ||
| Shipping expenses | $ | 4.00 | ||||
The planning budget for March was based on producing and selling24,000 units. However, during March the company actually producedand sold 30,600 units and incurred the following costs: |
| a. | Purchased 170,000 pounds of raw materials at a cost of $9.00 perpound. All of this material was used in production. | ||
| b. | Direct-laborersworked 82,000 hours at a rate of $18.00 per hour. | ||
| c. | Total variablemanufacturing overhead for the month was $505,000. | ||
| d. | Total advertising, sales salaries and commissions, and shippingexpenses were $337,000, $505,120, and $128,000, respectively. 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" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance.).)
|
Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-hours and its standard cost card per unit is as follows: |
| Directmaterials: 5 pounds at $8.00 per pound | $ | 40.00 |
| Direct labor: 2hours at $14 per hour | 28.00 | |
| Variable overhead: 2hours at $5 per hour | 10.00 | |
| Total standard costper unit | $ | 78.00 |
The planning budget for March was based on producing and selling25,000 units. However, during March the company actually producedand sold 30,000 units and incurred the following costs: |
| a. | Purchased 160,000 pounds of raw materials at a cost of $7.50 perpound. All of this material was used in production. | ||
| b. | Direct laborers worked 55,000 hours at a rate of $15.00 perhour. | ||
| c. | Total variable manufacturing overhead for the month was$280,500. Required:
|
