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 materials: 4 pounds at $10 per pound $ 40 Direct labor: 2hours at $16 per hour 32 Variable overhead: 2hours at $6 per hour 12 Total standard costper unit $ 84
The planning budget for March was based on producing and selling30,000 units. However, during March the company actually producedand sold 34,500 units and incurred the following costs:
a. Purchased 150,000 pounds of raw materials at a cost of $9.20 perpound. All of this material was used in production.
b. Direct laborers worked 62,000 hours at a rate of $17 perhour.
c. Total variable manufacturing overhead for the month was$390,600.
1) If Preble had purchased 177,000 pounds of materials at $9.20per pound and used 150,000 pounds in production, what would be thematerials price variance for March? (Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zero variance.). Do not roundintermediate calculations.)
2) If Preble had purchased 177,000 pounds of materials at $9.20per pound and used 150,000 pounds in production, what would be thematerials quantity variance for March? (Indicate the effectof each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zero variance.). Donot round intermediate calculations.)
3) What direct labor cost would be included in the companyâsplanning budget for March?
4) What direct labor cost would be included in the companyâsflexible budget for March?
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 materials: 4 pounds at $10 per pound | $ | 40 |
Direct labor: 2hours at $16 per hour | 32 | |
Variable overhead: 2hours at $6 per hour | 12 | |
Total standard costper unit | $ | 84 |
The planning budget for March was based on producing and selling30,000 units. However, during March the company actually producedand sold 34,500 units and incurred the following costs: |
a. | Purchased 150,000 pounds of raw materials at a cost of $9.20 perpound. All of this material was used in production. |
b. | Direct laborers worked 62,000 hours at a rate of $17 perhour. |
c. | Total variable manufacturing overhead for the month was$390,600. |
1) If Preble had purchased 177,000 pounds of materials at $9.20per pound and used 150,000 pounds in production, what would be thematerials price variance for March? (Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zero variance.). Do not roundintermediate calculations.)
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