Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below.] 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 materials: 4 pounds at $10 per pound40 Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour Total standard cost per unit 32 12 $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour c. Total variable manufacturing overhead for the month was $390,600.

Explanation / Answer

As per policy only first four questions will be answered

Part 8

Direct labor cost = standard price per unit * standard units = 32*30000 = $960,000

Part 9

Labor rate variance = AH * (AR - SR) = 62000*(17-16) =62000 Unfavorable = $62000 U

Part 10

Labor efficiency variance = SR * (AH - SH) = 16*(62000-(34500*2)) = 16 * (62000-69000) = -112000 = $112000 Favorable

Part 11

Labor spending variance = (AH * AR) - (SH * SR) = (62000*17) - (69000*16) = -50000 = $50000 Favorable

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