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

12) Variable overhead in planning budget = 30000*12 = 360000

13) Variable overhead in flexible budget = 34500*12 = 414000

14) Variable overhead rate variance = (6*62000-390600) = 18600 U

15) Variable overhead efficiency variance = (34500*2-62000)*6 = 42000 F

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