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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
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 per pound | $ | 50 |
Direct labor: 3 hours at $17 per hour | 51 | |
Variable overhead: 3 hours at $7 per hour | 21 | |
Total standard variable cost per unit | $ | 122 |
The company also established the following cost formulas for its selling expenses: |
Fixed Cost per Month | Variable Cost per Unit Sold | |||||
Advertising | $ | 330,000 | ||||
Sales salaries and commissions | $ | 230,000 | $ | 15.00 | ||
Shipping expenses | $ | 4.00 | ||||
The planning budget for March was based on producing and selling 24,000 units. However, during March the company actually produced and sold 30,600 units and incurred the following costs: |
a. | Purchased 170,000 pounds of raw materials at a cost of $9 per pound. All of this material was used in production. |
b. | Direct-laborers worked 68,000 hours at a rate of $18 per hour. |
c. | Total variable manufacturing overhead for the month was $512,000. |
d. | Total advertising, sales salaries and commissions, and shipping expenses were $337,000, $680,000, and $128,000, respectively. |
Required: |
What raw materials cost would be included in the company |
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