Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $ 210,000 $ 120,000 Variable Cost per Unit Sold costs: $ 13.00 $ 4.00 The planning budget for March was based on producing and selling 26,000 units. However, during March the company actually produced the follo

Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $ 210,000 $ 120,000 Variable Cost per Unit Sold costs: $ 13.00 $ 4.00 The planning budget for March was based on producing and selling 26,000 units. However, during March the company actually produced the follo

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

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 $9.00 per pound
Direct labor: 3 hours at $15 per hour
Variable overhead: 3 hours at $6 per hour
Total standard variable cost per unit
The company also established the following cost formulas for its
selling expenses:
Advertising
Sales salaries and commissions
Shipping expenses
Fixed Cost
per Month
$36.00
45.00
18.00
$99.00
$ 210,000
$ 120,000
Advertising
Sales salaries and commissions
Shipping expenses
Variable
Cost per
Unit Sold
$ 13.00
$ 4.00
The planning budget for March was based on producing and selling
26,000 units. However, during March the company actually produced
and sold 31,000 units and incurred the following costs:
a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per
pound. All of this material was used in production.
b. Direct-laborers worked 56,000 hours at a rate of $16.00 per hour.
c. Total variable manufacturing overhead for the month was
$524,720.
d. Total advertising, sales salaries and commissions, and shipping
expenses were $220,000, $460,000, and $125,000, respectively.
12. What amounts of advertising, sales salaries and commissions, and shipping
expenses would be included in the company's flexible budget for March?

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