**Preble Company: Cost Analysis** **Standard Cost Card per Unit:** - **Direct Material:** 4 pounds at $10.00 per pound = $40.00 - **Direct Labor:** 2 hours at $16.00 per hour = $32.00 - **Variable Overhead:** 2 hours at $6.00 per hour = $12.00 - **Total Standard Variable Cost per Unit:** $84.00 **Selling Expenses Cost Formulas:** | Expense Type | Fixed Cost (per Month) | Variable Cost (per Unit Sold) | |-------------------------------|--------------------------|-------------------------------| | Advertising | $270,000 | | | Sales Salaries and Commissions| $240,000 | $19.00 | | Shipping Expenses | | $10.00 | **March Planning & Actual Costs:** - Planned for 30,000 units; actually produced and sold 34,500 units. - **Costs Incurred:** a. Purchased 150,000 pounds of raw materials at $9.20 per pound (used entirely). b. Direct labor worked 62,000 hours at $17.00 per hour. c. Total variable manufacturing overhead was $390,600. d. Total advertising, sales salaries and commissions, and shipping expenses were $280,000, $490,000, and $185,000 respectively. **Analysis Required:** 3. **Materials Price Variance for March:** - Indicate variance effect: "F" for favorable, "U" for unfavorable, "None" for no effect. - Input amount as a positive value.
**Preble Company: Cost Analysis** **Standard Cost Card per Unit:** - **Direct Material:** 4 pounds at $10.00 per pound = $40.00 - **Direct Labor:** 2 hours at $16.00 per hour = $32.00 - **Variable Overhead:** 2 hours at $6.00 per hour = $12.00 - **Total Standard Variable Cost per Unit:** $84.00 **Selling Expenses Cost Formulas:** | Expense Type | Fixed Cost (per Month) | Variable Cost (per Unit Sold) | |-------------------------------|--------------------------|-------------------------------| | Advertising | $270,000 | | | Sales Salaries and Commissions| $240,000 | $19.00 | | Shipping Expenses | | $10.00 | **March Planning & Actual Costs:** - Planned for 30,000 units; actually produced and sold 34,500 units. - **Costs Incurred:** a. Purchased 150,000 pounds of raw materials at $9.20 per pound (used entirely). b. Direct labor worked 62,000 hours at $17.00 per hour. c. Total variable manufacturing overhead was $390,600. d. Total advertising, sales salaries and commissions, and shipping expenses were $280,000, $490,000, and $185,000 respectively. **Analysis Required:** 3. **Materials Price Variance for March:** - Indicate variance effect: "F" for favorable, "U" for unfavorable, "None" for no effect. - Input amount as a positive value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:**Preble Company: Cost Analysis**
**Standard Cost Card per Unit:**
- **Direct Material:** 4 pounds at $10.00 per pound = $40.00
- **Direct Labor:** 2 hours at $16.00 per hour = $32.00
- **Variable Overhead:** 2 hours at $6.00 per hour = $12.00
- **Total Standard Variable Cost per Unit:** $84.00
**Selling Expenses Cost Formulas:**
| Expense Type | Fixed Cost (per Month) | Variable Cost (per Unit Sold) |
|-------------------------------|--------------------------|-------------------------------|
| Advertising | $270,000 | |
| Sales Salaries and Commissions| $240,000 | $19.00 |
| Shipping Expenses | | $10.00 |
**March Planning & Actual Costs:**
- Planned for 30,000 units; actually produced and sold 34,500 units.
- **Costs Incurred:**
a. Purchased 150,000 pounds of raw materials at $9.20 per pound (used entirely).
b. Direct labor worked 62,000 hours at $17.00 per hour.
c. Total variable manufacturing overhead was $390,600.
d. Total advertising, sales salaries and commissions, and shipping expenses were $280,000, $490,000, and $185,000 respectively.
**Analysis Required:**
3. **Materials Price Variance for March:**
- Indicate variance effect: "F" for favorable, "U" for unfavorable, "None" for no effect.
- Input amount as a positive value.
Expert Solution
Formula
Material Price Variance = (Standard price per pound of material - Actual price per pound of material) X Actual Quantity of raw material used in production
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