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Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour hours and its standard cost card per unit
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour hours and its standard cost card per unit is as follows: 5 32 32 12 Direct material: 4 pounds at 58 per pound Direct labor: 2 hours at $10 per hour Variable overhead: 2 hours at $6 per hour Total standard variable cost per unit $ 70 Fored overhead was budgeted at $600,000. Foed overhead is applied on the basis of direct labour hours. The company also established the following cost formulas for its selling expenses: Fixed Cost Variable Cost per Month per Unit Sold Advertising $320,000 Sales salaries and commissions $220.000 S 14.00 Shipping expenses $ 3.00 The statio (le, 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: a. Purchased 100,000 pounds of raw materials at a cost of $7.4 per pound. All of this material was used in production b. Direct-labourers worked 67,000 hours at a rate of $17 per hour Total variable manufacturing overhead for the month was $422.100. And fxed manufacturing overhead was $604,000 d. Total advertising, sales salaries and commissions, and shipping expenses were $821,000, $731,000. and $127.000, respectively, c Required: What direct labour cost would be included in the company's flexible budget for March? Direct labor cost
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