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 pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour Total standard cost per unit 40 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

5) Material price variance = (10-9.20)*177000 = 141600 F

6) Material quantity variance = (34500*4-150000)*10 = 120000 U

7) Direct labour cost in planning budget = 30000*32 = 960000

8) Direct labour cost in flexible budget = 34500*32 = 1104000

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