14. What is the spending variance related to sales salaries and commissions? 15. What is the spending variance related to shipping expenses?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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14. What is the spending variance related to sales salaries and commissions?

15. What is the spending variance related to shipping expenses?

Required information
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.
Transcribed Image Text:Required information 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.
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