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
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: 5 pounds at $8.00 per pound | $ | 40.00 |
Direct labor: 2 hours at $14 per hour | 28.00 | |
Variable overhead: 2 hours at $5 per hour | 10.00 | |
Total standard cost per unit | $ | 78.00 |
The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: |
a. | Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. | |||||||||||||||||||||||||||
b. | Direct laborers worked 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.).)
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