Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2436393 • Letter: P
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: Direct material: 4 pounds at $10.00 per pound $ 40.00 Direct labor: 2 hours at $14.00 per hour 28.00 Variable overhead: 2 hours at $6.00 per hour 12.00 Total standard variable cost per unit $ 80.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 270,000 Sales salaries and commissions $ 100,000 $ 12.00 Shipping expenses $ 3.00 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 $15.00 per hour. c. Total variable manufacturing overhead for the month was $390,600. d. Total advertising, sales salaries and commissions, and shipping expenses were $279,000, $390,600, and $122,000, respectively.
What direct labor cost would be included in the company’s flexible budget for March?
What is the direct labor efficiency variance for March? (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 direct labor rate variance for March? (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 variable manufacturing overhead cost would be included in the company’s flexible budget for March?
What is the variable overhead efficiency variance for March? (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 variable overhead rate variance for March? (Do not round intermediate calculations. 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 amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
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.).)
What direct labor cost would be included in the company’s flexible budget for March?
7.What is the direct labor efficiency variance for March? (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.).)
8.What is the direct labor rate variance for March? (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.).)
9.What variable manufacturing overhead cost would be included in the company’s flexible budget for March?
10.What is the variable overhead efficiency variance for March? (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.).)
11.What is the variable overhead rate variance for March? (Do not round intermediate calculations. 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.).)
12.What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
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.).)
14.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.).)
15.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.).)
Explanation / Answer
6) Direct labor cost included in company's flexible budget actual output * standard cost per unit 34,500*28 966000 7) Direct labor Efficiency variance (Actual hours - standard hours allowed)*Standard rate (62000 - 34500*2)*14 98,000 F 8) Direct labor rate variance (Actual rate- standard rate)*actual hours (15 - 14)*62000 62,000 U 9) Variable manufacturing included in company's flexible budget actual output * standard cost per unit 34,500*12 414000 10) Variable overhead efficiency variance (actual hours - standard hours allowed)*standard rate (62000 - 34500*2)*6 42000 F 11) Variable overhead rate variance (actual rate - standard rate)*actual hours (390,600 - 62000*6) 18600 U 12) Advertising,Sales salaries and commissionand shipping expense flexible budget variable Fixed total Advertising 0 270,000 270000 Sales,salaries &comm(24600*16) (34500*12) 414000 100,000 514000 Shipping expense (34500*3)) 103500 0 103500 13) Spending variance to advertising Actual advertisng expense - flxeible budget 279,000-270,000 9000 U 14) spending variance related to sales ,salaries and commission aCtual - flexible 390,600-514,000 123400 F 15) Spending variance related to shipping expense Actual- flexibe; 122,000 - 103500 18500 U
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