CO 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 00 ZT Total standard variable cost per unit 00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising Sales salaries and commissions Shipping expenses $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. 7. What is the direct labor efficiency variance for March? (Indlcate the effect of each verlance by selecting "F" for favoreble, "U" for unfavorable, and "None" for no effect (l.e., zero verlance.). Input the amount as a posltive value.) Direct labor efficency vaniance, Prev 7 8 9 15 of 15 to search 7120 F5 F4 F7
CO 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 00 ZT Total standard variable cost per unit 00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising Sales salaries and commissions Shipping expenses $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. 7. What is the direct labor efficiency variance for March? (Indlcate the effect of each verlance by selecting "F" for favoreble, "U" for unfavorable, and "None" for no effect (l.e., zero verlance.). Input the amount as a posltive value.) Direct labor efficency vaniance, Prev 7 8 9 15 of 15 to search 7120 F5 F4 F7
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:CO
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
00 ZT
Total standard variable cost per unit
00
The company also established the following cost formulas for its selling expenses:
Fixed Cost
per Month
Variable Cost
per Unit Sold
Advertising
Sales salaries and commissions
Shipping expenses
$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.
7. What is the direct labor efficiency variance for March? (Indlcate the effect of each verlance by selecting "F" for favoreble, "U" for
unfavorable, and "None" for no effect (l.e., zero verlance.). Input the amount as a posltive value.)
Direct labor efficency vaniance,
Prev
7 8 9
15 of 15
to search
7120
F5
F4
F7
Expert Solution
Step 1
Labor efficiency variance = (Actual hours - Standard hours)*Standard rate
If the actual hours are more than the standard hours, then the labor time variance will be unfavorable.
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