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:

The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:

Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.

Direct laborers worked 55,000 hours at a rate of $15.00 per hour.

Total variable manufacturing overhead for the month was $280,500.

Required:

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

2. What direct labor cost would be included in the company’s planning budget for March?

3. What variable manufacturing overhead cost would be included in the company’s planning budget for March?

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:

Explanation / Answer

`Preble company Planning Budget For the month of March Units produced & sold in Planning Budget               25,000.00 Cost details Direct Materials @5lb/unit @$8/lb         1,000,000.00 Direct Labor @2Hrs/unit@$14/hr            700,000.00 Variable Ovehead@2Hrs@$5/hr            250,000.00 So planning budget Materials cost $    1,000,000.00 So planning budget direct labor cost $        700,000.00 So planning budget variable overheads cost $        250,000.00

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