Preble Company_Standard costing

$20.00

Description

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 lbs. @ 8.00 per pound-$40

Direct Labor: 2 hours @ 14 per hour-$28

Variable Overhead: 2 hours @ 5 per hour-$10

Total Standard Variable cost per Unit- $78

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

Row 1 Fixed
Row 2 Variable

Advertising $200,000

Sales Salaries & Commission $100,000 $12.00

Shipping Expenses $3.00

The planning budget for March was based on
producing and selling 25,000 units. However, during March the company actually
produced and sold 30,000 units and incurred the following cost:

A.
Purchased 160,000 pounds of raw
materials at a cost of 7.50 per pound. All of this material was used in
production.

B.
Direct laborers worked 55,000
hours at a rate of 15 per hour.

C.
Total variable manufacturing
overhead for the month was $280,500.

D.
Total advertising, salaries
& commissions and shipping expenses were $210,000 $455,000 and $115,000,
respectively.

1.
What raw materials cost would
be included in the company’s flexible budget
for March?

2.
What is the raw materials
quantity variance for March?

3.
What is the materials price
variance for March?

4.
If Preble had purchased 170,000
pounds of materials at 7.50 per pound and used 160,000 pounds in production,
what would be the materials quantity variance for March? Indicate the effect of
the variance as favorable, unfavorable or none.

5.
Same as question #4 but the
materials price variance. Indicate the effect.

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

7.
What is the direct labor
efficiency variance for March? Indicate the Effect as Favorable, Unfavorable,
or None.

8.
What is the direct labor rate
variance for March? Indicate the Effect.

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

10.
What is the variable overhead
efficiency variance for March? Indicate the Effect.

11.
What is the variable overhead
rate variance for March? Indicate the Effect

12.
What amounts of advertising,
sales salaries and commissions and shipping expenses would be included in the
company’s flexible budget for March? (Units Sold 30,000)

13.
What is the spending variance
related to advertising? Indicate the effect.

14.
What is the spending variance
related to sales salaries and commissions? Indicate the Effect.

15.
What is the spending variance
related to shipping expenses? Indicate the Effect

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