Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2438281 • 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:
The company also established the following cost formulas for its selling expenses:
The planning budget for March was based on producing and selling 21,000 units. However, during March the company actually produced and sold 26,000 units and incurred the following costs:
Purchased 160,000 pounds of raw materials at a cost of $6.50 per pound. All of this material was used in production.
Total advertising, sales salaries and commissions, and shipping expenses were $364,000, $655,520, and $130,000, respectively
9.
What variable manufacturing overhead cost would be included in the company’s flexible budget for March? variable manufacturing overhead cost?
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.).) Variable overhead efficiency 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.).) variable overhead rate variance?
What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
Unit sold (q). 26,000
Expenses
Advertising
Sale and Salaries and commissions
shipping expense
Total
[The following information applies to the questions displayed below.]Explanation / Answer
9) Variable manufacturing included in company's flexible budget actual output * standard cost per unit 26,000*27 702000 10) Variable overhead efficiency variance (actual hours - standard hours allowed)*standard rate (68000 - 26000*3)*9 90000 F 11) Variable overhead rate variance (actual rate - standard rate)*actual hours (655,200 - 9*68000) 43200 U 12) Advertising,Sales salaries and commissionand shipping expense flexible budget variable Fixed total Advertising 0 350,000 350000 Sales,salaries &comm(26000*16) (26000*16) 416000 250,000 666000 Shipping expense (26000*4) 104000 0 104000
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