Preble Company manufactures one product. Its variable manufacturing overhead is

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:

4 pounds at $9.00 per pound $ 36.00

Direct labor: 3 hours at $16.00 per hour 48.00

Variable overhead: 3 hours at $8.00 per hour 24.00 T

otal standard variable cost per unit $ 108.00 T

he company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 230,000

Sales salaries and commissions $ 270,000 $ 14.00 Shipping expenses $ 4.00

The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 33,000 units and incurred the following costs:

a. Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.

b. Direct-laborers worked 87,000 hours at a rate of $17.00 per hour.

c. Total variable manufacturing overhead for the month was $729,060.

d. Total advertising, sales salaries and commissions, and shipping expenses were $233,000, $729,060, and $144,000, respectively.

What raw materials cost would be included in the company's flexible budget for March? 2. What is the materials quantity variance for March? (Input the amount as a positive value Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance..) 3. What is the materials price variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance. 4.If Preble had purchased 173,000 pounds of materials at $7 per pound and used 165,000 pounds in production, what would be the materials quantity variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance..) If Preble had purchased 173,000 pounds of materials at $7.20 per pound and used 165,000 pounds in production, what would be the materials price variance for March? (Input the amount asa positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance. 12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company's flexible budget for March? Preble Company Flexible Budget For the Month Ended March 31 Units sold (q) 33,000 Expenses Advertising Sales salaries and commissions Shipping expenses Total 15.What is the spending variance related to shipping expenses? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

Explanation / Answer

Solution 1:

Standard quantity of material for actual production = 33000 * 4 = 132000 pound

Standard price of material = $9 per pound

Raw material cost to be included in flexible budget for march = 132000 * $9 = $1,188,000

Solution 2:

Actual quantity of material = 165000 pound

Actual price of material = $7.20 per pound

Material quantity variance = (SQ - AQ) * SP = (132000 - 165000) * $9 = $297,000 U

Solution 3:

Material price variance = (SP - AP) * AQ = ($9 - $7.20) * 165000 = $297,000 F

Solution 4:

IF preble had purchased 173000 pound of material at $7 per pound and used 165000 pound of material in production, then there will be on impact on material quantity variance as actual quantity consumed will remain the same.

Material quantity variance = (132000 - 165000) * $9 = $297,000 U

Solution 5:

IF preble had purchased 173000 pound of material at $7.20 per pound and used 165000 pound of material in production, then

Material price variance = (SP - AP) * AQ purchased = ($9 - $7.20) * 173,000 = $311,400 F

Note: I have answered more than required parts as per chegg policy. Kindly post separate question for answer of remaining parts.

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