11. What is the labor spending variance for March? (Indicate the effect of each

Question

11. What is the labor spending 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.). Input all amounts as positive values. Do not round intermediate calculations.)

Required information The Foundational 15 [LO10-1, LO10-2, LO10-3] [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:6 pounds at $8 per pound Direct labor: 3 hours at $14 per hour Variable overhead: 3 hours at $5 per hour Total standard cost per unit $ 48 42 15 $105 The planning budget for March was based on producing and selling 19,000 units.However, during March the company actually produced and sold 24,000 units and incurred the followingg costs a. Purchased 160,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production b. Direct laborers worked 60,000 hours at a rate of $15 per hour. c. Total variable manufacturing overhead for the month was $336,600

Explanation / Answer

Direct labour spending varience = SR-AR ×AH

=14-15 × 60000= 60000 U

SR= STANDARD RATE

AR= ACTUAL RATE

AH=ACTUAL HOURS

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