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 company also established the following cost formulas for its selling expenses:

The planning budget for March was based on producing and selling 19,000 units. However, during March the company actually produced and sold 24,000 units and incurred the following costs:

Purchased 160,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.

Total advertising, sales salaries and commissions, and shipping expenses were $380,000, $337,020, and $132,000, respectively.

  Direct material: 6 pounds at $8.00 per pound $ 48.00   Direct labor: 4 hours at $16.00 per hour 64.00   Variable overhead: 4 hours at $4.00 per hour 16.00   Total standard variable cost per unit $ 128.00 9. What variable manufacturing overhead cost would be included in the company's flexible budget for March? Variable manufacturing overhead cost

Explanation / Answer

9) Variable manufacturing overhead in flexible budget = 24000*16 = 384000

10) Variable overhead efficiency variance = (24000*4-82000)*4 = 56000 F

11) Variable overhead rate variance = (4*82000-336960) = 8960 U

12) Flexible budget :

Unit sold 24000 Advertising 370000 Sales salaries and commissions 436000 Shipping expenses 120000 Total 926000

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