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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.

1.What raw materials cost would be included in the company’splanning budget for March?

What raw materials cost would be included in the company’sflexible budget for March?

What is the materials price variance for March?(Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zerovariance.).)

What is the materials quantity variance for March?(Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zerovariance.).)

If Preble had purchased 170,000 pounds of materials at $7.50 perpound and used 160,000 pounds in production, what would be thematerials price variance for March? (Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for noeffect (i.e., zero variance.).)

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Hubert Koch
Hubert KochLv2
28 Sep 2019

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