chapter 10

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	$	48
Direct labor: 4 hours at $13 per hour		52
Variable overhead: 4 hours at $5 per hour		20
Total standard cost per unit	$	120

The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 25,500 units and incurred the following costs:

Purchased 170,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.

Direct laborers worked 73,000 hours at a rate of $14 per hour.

Total variable manufacturing overhead for the month was $427,050.

2. What raw materials cost would be included in the companys flexible budget for March?

3. 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.). Input all amounts as positive values.)

8. What direct labor cost would be included in the companys flexible budget for March?