Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2516221 • 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 26,000 units. However, during March the company actually produced and sold 31,000 units and incurred the following costs:
Purchased 155,000 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 $211,000, $525,000, and $142,000, respectively.
Required information
eBook & Resources
eBook: Compute the direct labor rate and efficiency variances and explain their significance.eBook: Compute the direct materials price and quantity variances and explain their significance.eBook: Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.eBook: Prepare a flexible budget.eBook: Prepare a report showing revenue and spending variances.
What is the materials quantity 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.).)
eBook & Resources
eBook: Compute the direct labor rate and efficiency variances and explain their significance.eBook: Compute the direct materials price and quantity variances and explain their significance.eBook: Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.eBook: Prepare a flexible budget.eBook: Prepare a report showing revenue and spending variances.
What is the materials price 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.).)
If Preble had purchased 171,000 pounds of materials at $7 per pound and used 155,000 pounds in production, what would be the materials quantity 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.).)
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:
Explanation / Answer
1) Material cost in flexible budget = 31000*36 = 1116000
2) Material quantity variance = (31000*4-155000)*9 = 279000 U
3) Material price variance = (9-7.20)*155000 = 279000 F
4) Material quantity variance = (31000*4-155000)*9 = 279000 U
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