14. What is the spending variance related to sales salaries and commissions? 15. What is the spending variance related to shipping expenses?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
14. What is the spending variance related to sales salaries and commissions?
15. What is the spending variance related to shipping expenses?
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The Foundational 15 (Algo) [LO9-1, LO9-2, LO9-4, LO9-5, LO9-6]
[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: 4 pounds at $10.00 per pound
Direct labor: 2 hours at $16 per hour
Variable overhead: 2 hours at $6 per hour
Total standard variable cost per unit
The company also established the following cost formulas for its selling expenses:
Variable
Fixed Cost per Cost per
Month
Unit Sold
Advertising
Sales salaries and commissions
Shipping expenses
$ 40.00
32.00
12.00
$ 84.00
$ 270,000
$ 240,000
$ 19.00
$ 10.00
The planning budget for March was based on producing and selling 30,000 units. However, during March the company
actually produced and sold 34,500 units and incurred the following costs:
a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production.
b. Direct-laborers worked 62,000 hours at a rate of $17.00 per hour.
c. Total variable manufacturing overhead for the month was $390,600.
d. Total advertising, sales salaries and commissions, and shipping expenses were $280,000, $490,000, and $185,000,
respectively.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F882f01b0-5b34-4623-992d-7e87f1b02b80%2F62d81e42-d8cb-420d-a448-cf31edac67e0%2Fg7r0kqd_processed.jpeg&w=3840&q=75)
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