Question
[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct
[The following information applies to the questions displayed below.] |
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: 3 hours at $17.00 per hour | 51.00 | |
Variable overhead: 3 hours at $9.00 per hour | 27.00 | |
Total standard variable cost per unit | $ | 118.00 |
The company also established the following cost formulas for its selling expenses: |
Fixed Cost per Month | Variable Cost per Unit Sold | |||||
Advertising | $ | 350,000 | ||||
Sales salaries and commissions | $ | 250,000 | $ | 16.00 | ||
Shipping expenses | $ | 4.00 | ||||
The planning budget for March was based on producing and selling 21,000 units. However, during March the company actually produced and sold 26,000 units and incurred the following costs: |
a. | Purchased 160,000 pounds of raw materials at a cost of $6.50 per pound. All of this material was used in production. | ||||||
b. | Direct-laborers worked 68,000 hours at a rate of $19.00 per hour. | ||||||
c. | Total variable manufacturing overhead for the month was $655,200. | ||||||
d. | Total advertising, sales salaries and commissions, and shipping expenses were $364,000, $655,520, and $130,000, respectively.
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