Preble Company manufactures one product 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 Cost per Unit Sold Direct labor cost $ 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. What direct labor cost would be included in the company's flexible budget for arch?
Preble Company manufactures one product 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 Cost per Unit Sold Direct labor cost $ 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. What direct labor cost would be included in the company's flexible budget for arch?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 = $36.00
- Direct labor: 3 hours at $15 per hour = $45.00
- Variable overhead: 3 hours at $6 per hour = $18.00
Total standard variable cost per unit = $99.00
The company also established the following cost formulas for its selling expenses:
| | Fixed Cost per Month | Variable Cost per Unit Sold |
|--------------------------------------|----------------------|-----------------------------|
| Advertising | $210,000 | |
| Sales salaries and commissions | $120,000 | $13.00 |
| Shipping expenses | | $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.
6. What direct labor cost would be included in the company’s flexible budget for March?
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