Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours
Question:
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 $ 32.00 Direct labor: 2 hours at $16 per hour 32.00 Variable overhead: 2 hours at $6 per hour 12.00 Total standard variable cost per unit $ 76.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 320,000 Sales salaries and commissions $ 340,000 $ 24.00 Shipping expenses $ 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: Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production. Direct-laborers worked 67,000 hours at a rate of $17.00 per hour. Total variable manufacturing overhead for the month was $422,100. Total advertising, sales salaries and commissions, and shipping expenses were $329,000, $515,000, and $235,000, respectively. Foundational 9-6 (Algo) 6. What direct labor cost would be included in the companys flexible budget for March?
Auditing Cases An Active Learning Approach
ISBN: 9781266566899
2nd Edition
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt