Preble Company manufactures one product. Its variable manufacturing overhead is
ID: 2521453 • 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.
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.).)
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
Qty Rate Amt Direct Material 5.00 8.00 40.00 6 Direct Labor 3.00 17.00 51.00 Direct Labor 3.00 17.00 51.00 Units Actual 26000 Variable OH 3.00 9.00 27.00 Direct Labor to be included in Flex Budget 78000 17.00 1326000 Total Standard Cost PU 118.00 (26000*3) 7 Direct Labor Efficency Variance: Selling Expense Fixed Variable (Standard Hours-Actual Hours)Standard Price Advertising 350000 (78000-68000)17 Sales Salaries 250000 16.00 170000 Favorable Shipping Exp 4.00 8 Direct Labor Rate Variance: (Standard Price-Actual Price)Actual Hours Units Actual 26000 (17-19)68000 -136000 Unfavourable Qty Rate Amt Direct Material 1,30,000 8.00 10,40,000 9 Variable OH 3.00 9.00 27.00 Direct Labor 78,000 17.00 13,26,000 Units Actual 26000 Variable OH 78,000 9.00 7,02,000 Variable OH to be included in Flex Budget 78000 9.00 702000 Total Standard Cost For Actual Production 30,68,000 (26000*3) 10 Variable OH Efficency Variance: Actual Costs: Qty Rate Amt (Standard Hours-Actual Hours)Standard Price Direct Material 1,60,000 6.50 10,40,000 (78000-68000)9 Direct Labor 68,000 19.00 12,92,000 90000 Favorable Variable OH 68,000 9.64 6,55,200 Total Standard Cost PU 29,87,200.00
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