Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its…

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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 material: 4 pounds at $8.00 per pound

Direct labor: 2 hours at $16 per hour

Variable overhead: 2 hours at $6 per hour

Total standard variable cost per unit

The company also established the following cost formulas for its selling expenses:

Variable

Cost per

Unit Sold

Advertising

Sales salaries and commissions

Shipping expenses

Fixed Cost

per Month

$ 320,000

$ 340,000

$ 32.00

32.00

12.00

$.76.00

$ 24.00

$15.00

The planning budget for March was based on producing and selling 32,000 units. However, during March the company

actually produced and sold 37,000 units and incurred the following costs:

a. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production.

b. Direct-laborers worked 67,000 hours at a rate of $17.00 per hour.

c. Total variable manufacturing overhead for the month was $422,100.

d. Total advertising, sales salaries and commissions, and shipping expenses were $329,000, $515,000, and $235,000,

respectively. 2. 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.). Input the amount as a positive value.)

Materials quantity variance 6. What direct labor cost would be included in the company’s flexible budget for March?

Direct labor cost 9. What variable manufacturing overhead cost would be included in the company’s flexible budget for March?

Variable manufacturing overhead cost 10. What is the variable overhead efficiency variance for March? (Indicate the effect of each variance by selecting “F” for favorable.

“U” for unfavorable, and “None” for no effect (.e., zero variance.). Input the amount as a positive value.)

Vanable overhead efficiency variance 11. What is the variable overhead rate 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 the amount as a positive value.)

Variable overhead rate variance 14. What is the spending variance related to sales salaries and commissions? (Indicate the effect of each variance by selecting “F” for

favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance.). Input the amount as a positive value.)

Spending variance related to sales salaries and commissions 15. What is the spending variance related to shipping expenses? (indicate the effect of each variance by selecting “F” for favorable,

“U” for unfavorable, and “None” for no effect (i.e.. zero variance.). Input the amount as a positive value.)

Spending variance related to shipping expenses

Expert Answer:

Answer rating: 100% (QA)

To calculate the variances and answer the questions we need to compare the actual costs with the standard costs based on the given information Let s c

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