The following information applies to the questions displayed below.] Preble Comp
ID: 2527655 • Letter: T
Question
The following information applies to the questions displayed below.] 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: Direct materials: 4 pounds at $9 per pound $ 36 Direct labor: 3 hours at $12 per hour 36 Variable overhead: 3 hours at $8 per hour 24 Total standard cost per unit $ 96 The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 33,000 units and incurred the following costs: Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. Direct laborers worked 58,000 hours at a rate of $13 per hour. Total variable manufacturing overhead for the month was $729,060. 5.value: 5.00 pointsRequired information 4. What is the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)ReferenceseBook & Resources WorksheetLearning Objective: 11-01 Compute the direct materials price and quantity variances and explain their significance.Learning Objective: 11-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Difficulty: 2 MediumLearning Objective: 11-02 Compute the direct labor rate and efficiency variances and explain their significance.
6.value: 5.00 pointsRequired information 6. If Preble had purchased 173,000 pounds of materials at $7.20 per pound and used 165,000 pounds in production, what would be the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)
ReferenceseBook & Resources WorksheetLearning Objective: 11-01 Compute the direct materials price and quantity variances and explain their significance.Learning Objective: 11-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Difficulty: 2 MediumLearning Objective: 11-02 Compute the direct labor rate and efficiency variances and explain their significance.
7.value: 5.00 pointsRequired information 8. What direct labor cost would be included in the company’s flexible budget for March?
ReferenceseBook & Resources WorksheetLearning Objective: 11-01 Compute the direct materials price and quantity variances and explain their significance.Learning Objective: 11-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Difficulty: 2 MediumLearning Objective: 11-02 Compute the direct labor rate and efficiency variances and explain their significance.
8.value: 5.00 pointsRequired information 10. What is the labor efficiency variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)
ReferenceseBook & Resources WorksheetLearning Objective: 11-01 Compute the direct materials price and quantity variances and explain their significance.Learning Objective: 11-03 Compute the variable
Explanation / Answer
4) Material quantity variance = (33000*4-165000)*9 = 297000 U
6) Material quantity variance = (33000*4-165000)*9 = 297000 U
8) Direct labour cost in flexible budget = 33000*36 = 1188000
10) Labour efficiency variance = (33000*3-58000)*12 = 492000 F
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