12. What variable manufacturing overhead cost would be included in the company’s

Question

12. What variable manufacturing overhead cost would be included in the company’s planning budget for March?

12b What variable manufacturing overhead cost would be included in the company’s flexible budget for March?

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

12. Variable manufacturing overhead cost would be included in the company’s planning budget = Budgeted Unit cost of variable manufacturing overhead x Planned units of production

= $15 x 19000 = $285000

12b. Variable manufacturing overhead cost would be included in the company’s flexible budget = Budgeted Unit cost of variable manufacturing overhead x Actual units of production

= $15 x 24000 = $360000

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