Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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: 8 pounds at $10.00 per pound $ 80.00
Direct labor: 5 hours at $13 per hour 65.00
Variable overhead: 5 hours at $8 per hour 40.00
Total standard variable cost per unit $ 185.00

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

Fixed Cost per Month Variable Cost per Unit Sold
Advertising $ 290,000
Sales salaries and commissions $ 280,000 $ 21.00
Shipping expenses $ 12.00

The planning budget for March was based on producing and selling 15,000 units. However, during March the company actually produced and sold 17,000 units and incurred the following costs:

  1. Purchased 170,000 pounds of raw materials at a cost of $8.00 per pound. All of this material was used in production.
  2. Direct-laborers worked 64,000 hours at a rate of $14.00 per hour.

  3. Total variable manufacturing overhead for the month was $513,920.

  4. Total advertising, sales salaries and commissions, and shipping expenses were $300,000, $500,000, and $205,000, respectively.

Required:

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Futures And Options Market

Authors: John C. Hull

6th Edition

0132242265, 9780132242264

More Books

Students also viewed these Finance questions