Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2329083 • Letter: P
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:
The company also established the following cost formulas for its selling expenses:
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:
Direct-laborers worked 69,000 hours at a rate of $15.00 per hour.
Total variable manufacturing overhead for the month was $565,110.
Total advertising, sales salaries and commissions, and shipping expenses were $345,000, $525,000, and $255,000, respectively.
11a. What is the variable overhead rate 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.)
11b.What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
11c. What is the spending variance related to advertising? (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.)
11d. What is the spending variance related to sales salaries and commissions? (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.)
11e. What is the spending variance related to shipping expenses? (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.)
Direct material: 5 pounds at $9.00 per pound $ 45.00 Direct labor: 3 hours at $14 per hour 42.00 Variable overhead: 3 hours at $8 per hour 24.00 Total standard variable cost per unit $ 111.00Explanation / Answer
HI ,
Summarizing information from question here :
Variable overhead Variance reflects the variance
233920 F
Favourable because Actual Rate came out lower than set standard.
Flexible Budget means the budget with revised actual figures at actual production levels
5000 A ( Adverse - as Actual is higher than Std )
Std cost / unit Std Actual Direct Material 45 42.5 Direct Labour 42 45 Variable Overhead 24 16.6 Total Std V cost 111 104.12Related Questions
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