Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2463188 • 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 planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:
Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
Direct laborers worked 55,000 hours at a rate of $15.00 per hour.
Total variable manufacturing overhead for the month was $280,500
What raw materials cost would be included in the company’s flexible budget for March?
What direct labor cost would be included in the company’s planning budget for March?
What direct labor cost would be included in the company’s flexible budget for March?
What is the labor rate variance for March?
What is the labor efficiency variance for March?
Direct materials: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:
a.Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b.Direct laborers worked 55,000 hours at a rate of $15.00 per hour.
c.Total variable manufacturing overhead for the month was $280,500
2.What raw materials cost would be included in the company’s flexible budget for March?
7.What direct labor cost would be included in the company’s planning budget for March?
8.What direct labor cost would be included in the company’s flexible budget for March?
9.What is the labor rate variance for March?
10.What is the labor efficiency variance for March?
Explanation / Answer
2)
Raw materials cost that would be included in the company’s flexible budget for March
= actual production x standard raw material cost per unit of production
= 30000 units x $40/unit
= $1200000
7)
Direct labor cost that would be included in the company’s planning budget for March
= planned production x standard direct labour cost per unit
= 25000 units x $28 / unit
= $700000
8)
Direct labor cost that would be included in the company’s flexible budget for March
= Actual production x standard direct labour cost per unit
= 30000 units x $28/unit
= $840000
9)
Labour Rate variance
= Standard labour rate x actual hours - actual labour cost
= $14/hour x 55000 hours - 55000 hours x $15/hour
= $55000 Unfavourable
10)
Standard labour hours required for actual production = 30000 unis x 2 hour / unit = 60000 hours
Labour Efficiency Variance
= (Standard hours - actual hours ) x standard labour rate
= (60000 hours - 55000 hours) x $14 / hour
= $70000 favourable
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.