**Title: Cost Analysis for Preble Company's Product Manufacturing****Introduction:**Preble Company manufactures a single product. The following is a detailed breakdown of the variable manufacturing overhead and selling expenses associated with the product.**Standard Cost Card per Unit:**- **Direct Material:** - 4 pounds at $10.00 per pound = $40.00- **Direct Labor:** - 2 hours at $16 per hour = $32.00- **Variable Overhead:** - 2 hours at $6 per hour = $12.00- **Total Standard Variable Cost per Unit:** $84.00**Selling Expenses Cost Formulas:**- **Advertising:** - **Fixed Cost per Month:** $270,000 - **Variable Cost per Unit Sold:** $12.00- **Sales Salaries and Commissions:** - **Fixed Cost per Month:** $240,000 - **Variable Cost per Unit Sold:** $19.00- **Shipping Expenses:** - **Variable Cost per Unit Sold:** $10.00**March Budget and Actual Production Costs:**- **Planned Production and Sales:** 30,000 units- **Actual Units Produced and Sold:** 34,500 units**Incurred Costs for March:**a. **Raw Materials:** - Purchased: 150,000 pounds at $9.20 per pound - All materials used in productionb. **Direct Labor:** - Hours Worked: 62,000 hours at $17.00 per hourc. **Variable Manufacturing Overhead:** - Total Cost: $390,600d. **Total Selling Expenses:** - Advertising: $280,000 - Sales Salaries and Commissions: $490,000 - Shipping Expenses: $185,000**Materials Quantity Variance Analysis:**- **Scenario:** If 177,000 pounds of materials were purchased at $9.20 per pound, and 150,000 pounds were used in production, the materials quantity variance requires analysis for March. The potential variances should be assessed as favorable (F), unfavorable (U), or none for no effect.**Diagram/Graph Explanation:**The image includes no diagrams or graphs needing further explanation.**Conclusion:**This detailed cost breakdown provides insights into the production and selling expenses

Answered: Preble Company manufactures one product…

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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Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 80.00 $ 60.00 $ 72.00 Variable expenses: Direct materials 24.00 15.00 9.00 Other variable expenses 24.00 33.00 45.00 Total variable expenses 48.00 48.00 54.00 Contribution margin $ 32.00 $ 12.00 $ 18.00 Contribution margin ratio 40% 20% 25% The company estimates that it can sell 1,000 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 6,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 6,000 pounds of materials?
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: 8 pounds at $10.00 per pound Direct labor: 5 hours at $13 per hour Variable overhead: 5 hours at $8 per hour Total standard variable cost per unit $ 80.00 65.00 40.00 $ 185.00 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $ 290,000 $ 280,000 Variable Cost per Unit Sold $ 21.00 $ 12.00 The planning budget for March was based on producing and selling 15,000 units. However, during March the company actually produced and sold 17,000 units and incurred the following costs: a. Purchased 170,000 pounds of raw materials at a cost of $8.00 per pound. All of this material was used in production. b. Direct-laborers worked 64,000 hours at a rate of $14.00 per hour. c. Total variable…
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: 8 pounds at $10.00 per pound $ 80.00 Direct labor: 5 hours at $13 per hour 65.00 Variable overhead: 5 hours at $8 per hour 40.00 Total standard variable cost per unit $ 185.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 290,000 Sales salaries and commissions $ 280,000 $ 21.00 Shipping expenses $ 12.00 The planning budget for March was based on producing and selling 15,000 units. However, during March the company actually produced and sold 17,000 units and incurred the following costs: a. Purchased 170,000 pounds of raw materials at a cost of $8.00 per pound. All of this material was used in production. b. Direct-laborers worked 64,000 hours at a rate…
Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Additional data concerning these products are listed below. Grinding minutes per unit Selling price per unit Variable selling cost per unit Monthly demand in units Products A $14.80 C B $10.70 $11.50 27.90 3.20 19.90 4.80 27.00 35.30 $ 66.50 $ 77.10 $75.80 34.10 3.10 27.10 Products A B 4.30 5.80 $76.60 $94.00 $2.70 $ 1.70 4,500 4,500 D $ 11.10 40.90 3.70 37.70 $93.40 C D 4.80 3.90 $87.90 $ 104.70 $ 3.80 $ 2.10 3,500 2,500 The grinding machines are potentially the constraint in the production facility. A total of 71,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the…
A -6
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 Variable manufacturing overhead cost 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…
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: $ 55.00 Direct material: 5 pounds at $11.00 per pound Direct labor: 3 hours at $12 per hour Variable overhead: 3 hours at $7 per hour 36.00 21.00 Total standard variable cost per unit $112.00 The company also established the following cost formulas for its selling expenses: Fixed Cost Variable Cost per Month $ 280,000 $ 260,000 per Unit Sold Advertising Sales salaries and commissions $ 20.00 $ 11.00 Shipping expenses The planning budget for March was based on producing and selling 21,000 units. However, during March the company actually produced and sold 26,600 units and incurred the following costs: a. Purchased 154,000 pounds of raw materials at a cost of $9.50 per pound. All of this material was used in production. b. Direct-laborers worked 63,000 hours at a rate of $13.00 per hour. c. Total variable…
Standard Product Costs Deerfield Company manufactures product M in its factory. Production of M requires 2 pounds of material P, costing $4 per pound and 0.5 hour of direct labor costing, $10 per hour. The variable overhead rate is $8. per direct labor hour, and the fixed overhead rate is $12 per direct labor hour. What is the standard product cost for product M? Direct material Direct labor Variable overhead Fixed overhead Standard product cost per unit $ $
Henry Company has established the following standards for the costs of one unit of its product. The standard production overhead costs per unit are based on direct-labor hours. Calculation for standard per unit cost is as follows: Std Cost Std Qty Std Price/Rate Direct Material $ 14.40 6.00 kg $ 2.40/kg Direct Labor $ 3.00 0.40 hour $ 7.50/hour Variable Overhead $ 4.00 0.40 hour $ 10.00/hour Fixed Overhead* $ 4.80 0.40 hour $ 12.00/hour Total $ 26.20 *based on practical capacity of 2,500 direct-labor hour per month During December 2020, Henry purchased 30,000 kg of direct material at a total cost of $75,000. The total wages for December were $20,000, 75% of which were for direct labor. Henry manufactured 4,500 units of product during December 2020, using 28,000kg of the direct material purchased in December and 2,100 direct-labor hours. Actual variable and fixed overhead cost were $23,100 and $25,000, respectively.…
6
neview Problem Xavier Company produces a single product. Variable manufacturing overhead is applied to prod- ucts on the basis of direct labor-hours. The standard costs for one unit of product are as follows: Direct material: 6 ounces at $0.50 per ounce Direct labor: 0.6 hours at $30.00 per hour.. Variable manufacturing overhead: 0.6 hours at $10.00 per hour.. $ 3.00 18.00 6.00 Total standard variable cost per unit.. $27.00 During June, 2,000 units were produced. The costs associated with June's operations were as follows: Material purchased: 18,000 ounces at $0.60 per ounce. Material used in production: 14,000 ounces. Direct labor: 1,100 hours at $30.50 per hour Variable manufacturing overhead costs incurred $10,800 $33,550 $12,980 Required: Compute the direct materials, direct labor, and variable manufacturing overhead variances.
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 92.00 $ 66.00 $ 82.00 Variable expenses: Direct materials 27.60 18.00 12.00 Other variable expenses 27.60 31.50 45.40 Total variable expenses 55.20 49.50 57.40 Contribution margin $ 36.80 $ 16.50 $ 24.60 Contribution margin ratio 40% 25% 30% The company estimates that it can sell 950 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 6,100 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 6,100 pounds of materials?

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