ble Company manufactures one product. Its variable manufacturing overhead is app
ID: 2407462 • Letter: B
Question
ble 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: 5 pounds at $10.00 per pound $ 50.00
Direct labor: 2 hours at $13.00 per hour 26.00
Variable overhead: 2 hours at $8.00 per hour 16.00
Total standard variable cost per unit $ 92.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per Month Variable Cost per Unit Sold
Advertising $ 400,000
Sales salaries and commissions $ 130,000 $ 11.00
Shipping expenses $ 3.00
The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,600 units and incurred the following costs:
a. Purchased 200,000 pounds of raw materials at a cost of $9.40 per pound. All of this material was used in production.
b. Direct-laborers worked 65,000 hours at a rate of $14.00 per hour.
c. Total variable manufacturing overhead for the month was $525,000.
d. Total advertising, sales salaries and commissions, and shipping expenses were $416,000, $525,200, and $135,000, respectively.
What is the spending variance related to advertising? (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.).)
What is the spending variance related to sales salaries and commissions? (Input the amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
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.).)
13.What is the spending variance related to advertising? (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
13) Spending variance to advertising Actual advertisng expense - flxeible budget 416000 - 400,000 16000 U 14) spending variance related to sales ,salaries and commission aCtual - flexible 525200 - 543600 18400 F 15) Spending variance related to shipping expense Actual- flexibe; 135000-112800 22200 U
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