Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct...

  

 

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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: 5 pounds at $10.00 per pound Direct labor: 4 hours at $16 per hour Variable overhead: 4 hours at $7 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 $50.00 64.00 28.00 $142.00 $ 220,000 $ 140,000 $14.00 $ 5.00 The planning budget for March was based on producing and selling 20.000 units. However, during March the company actually produced and sold 24,600 units and incurred the following costs: a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $653.220. d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000, respectively. 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: 5 pounds at $10.00 per pound Direct labor: 4 hours at $16 per hour Variable overhead: 4 hours at $7 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 $50.00 64.00 28.00 $142.00 $ 220,000 $ 140,000 $14.00 $ 5.00 The planning budget for March was based on producing and selling 20.000 units. However, during March the company actually produced and sold 24,600 units and incurred the following costs: a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $653.220. d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000, respectively.

Answer rating: 100% (QA)

Answer to the question no 1 To calculate the materials price variance we need to compare the actual cost of materials per pound with the standard cost ... View the full answer