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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 $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 | |
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Total standard variable cost per unit | $ | 78.00 |
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The company also established the following cost formulas for its selling expenses: |
Fixed Cost per Month | Variable Cost per Unit Sold | |||||
Advertising | $ | 200,000 | ||||
Sales salaries and commissions | $ | 100,000 | $ | 12.00 | ||
Shipping expenses | $ | 3.00 | ||||
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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. |
d. | Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000, respectively. |
Required: |
9. What variable manufacturing overhead cost would be included in the company |
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