Answered step by step
Verified Expert Solution
Question
1 Approved Answer
a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 units,
a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 units, respectively. All sales are on credit b. Forty percent of credit sales are collected in the month of the sale and 60% in the following month. c. The ending finished goods inventory equals 20% of the following month's unit sales. d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 kilograms of raw materials. The raw materials cost $2.00 per kilogram. e. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. f. The direct labour wage rate is $15 per hour. Each unit of finished goods requires two direct labour-hours. g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000. 7. If the cost of raw material purchases in June is $88,880, what are the estimated cash disbursements for raw materials purchases in July? Answer is complete but not entirely correct. Total cash disbursements: $ 74,060 [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 labour-hours, and its standard costs per unit are as follows Direct materials: 5 kg at $8.00 per kg Direct labour: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40.00 28.00 10.00 $78.00 The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 kg of raw materials at a cost of $7.50 per kg. All of this material was used in production. b. Direct labour: 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500. 1. What is the materials price 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.).) Materials price variance Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: Direct materials: 5 kg at $8.00 per kg Direct labour: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40.00 28.00 10.00 $78.00 The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 kg of raw materials at a cost of $7.50 per kg. All of this material was used in production. b. Direct labour: 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500. 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.).) Materials quantity variance: Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: Direct materials: 5 kg at $8.00 per kg Direct labour: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40.00 28.00 10.00 $78.00 The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 kg of raw materials at a cost of $7.50 per kg. All of this material was used in production. b. Direct labour: 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500 5. What is the labour 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.).) Labour rate variance Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: Direct materials: 5 kg at $8.00 per kg Direct labour: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40.00 28.00 10.00 $78.00 The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 kg of raw materials at a cost of $7.50 per kg. All of this material was used in production. b. Direct labour: 55,000 hours at a rate of $15.00 per hour c. Total variable manufacturing overhead for the month was $280,500. 6. What is the labour efficiency 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.).) Labour efficiency variance Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: Direct materials: 5 kg at $8.00 per kg Direct labour: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40.00 28.00 10.00 $78.00 The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 kg of raw materials at a cost of $7.50 per kg. All of this material was used in production. b. Direct labour: 55,000 hours at a rate of $15.00 per hour. Total variable manufacturing overhead for the month was $280,500. 7. What is the variable overhead 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.).) Variable overload rate variance [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 labour-hours, and its standard costs per unit are as follows Direct materials: 5 kg at Direct labour: 2 hours at $8.00 per kg $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40.00 28.00 10.00 $78.00 The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 kg of raw materials at a cost of $7.50 per kg. All of this material was used in production b. Direct labour: 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500 8. What is the variable overhead efficiency variance for March? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.)) Variable overhead efficiency Variance $ Fantastic Feeder Products Inc. manufactures high-quality wooden cutting boards sold to restaurants and gourmet home cooks. One of these boards, the CertiPro II, requires an expensive hardwood. During a recent month, the company manufactured 1,200 CertiPro II cutting boards using 540 metres of hardwood. The hardwood cost the company $2,970. The company's standards for one CertiPro Il cutting board are 0.4 metres of hardwood, at a cost of $5.00 per metre. Required: 1-8. What cost for wood should have been incurred to make 1,200 CertiPro Il cutting boards? Total standard cost 1-b. How much greater or less is this than the cost that was incurred? (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (ie., zero variance).) Total variance Skyinc provides in-flight meals for a number of major airlines. One of the company's products is stuffed cannelloni with roasted pepper sauce, fresh baby com, and spring salad. During the most recent week, the company prepared 6,000 of these meals, using 1,150 direct labour-hours. The company paid these direct labour workers a total of $17,250 for this work, or $15 per hour According to the standard cost card for this meal, it should require 0.20 direct labour-hours at a cost of $14 per hour Required 1-a. What direct labour cost should have been incurred to prepare 6,000 meals? Total stardant direct labour cost 1-b. How much does this differ from the actual direct labour cost? (Indicate the effect of variance by selecting "F* for favourable. "U" for unfavourable, and "None" for no effect (ie., zero variance).) Total direct labour valance Claims Management Inc. provides claims processing services to several large health insurance providers. Customers who are covered by health insurance provided by one of Claims Management's partners submit their claims for health and dental services along with related documentation, and the employees at Claims Management compare their claims to the details of their benefit plans and calculate the value of the benefits owed. The company uses a predetermined variable overhead rate based on direct labour-hours. In the month of September, 15,000 claims were processed using 4,500 direct labour-hours. The company incurred a total of $4,950 in variable overhead costs. According to the company's standards, 0.25 direct labour-hours are required to process a claim, and the variable overhead rate is $1.20 per direct labour-hour. Required. 1-a. What variable overhead cost should have been incurred to process the 15,000 claims? Standard variabile overhead cost 1-b. How much does this differ from the actual variable overhead cost? (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Total variable overhead sadadck 2. Break down the difference computed in requirement 1-b above into a variable overhead spending variance and a variable overhea efficiency variance. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations.) Variable overhead spending variance Variable overhead efficiency variance
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started