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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 per pound $ 36 Direct labor: 3 hours at $12 per hour 36 Variable overhead: 3 hours at $8 per hour 24 Total standard variable cost per unit $ 96 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and Shipping expenses Fixed Cost per Variable Cost per Month Unit Sold $ 2,30,000 $ 1,60,000 $ 15 $6 The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 33,000 units and incurred the following costs: a. Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct laborers worked 58,000 hours at a rate of $13 per hour. c. Total variable manufacturing overhead for the month was $729,060. d. Total advertising, sales salaries, and commissions, and shipping expenses were $240,000, $470,000, and $145,000, respectively. What is the spending variance related to sales salaries and commissions?A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $7 per lb.) Direct labor Overhead (2hrs. @ $16 per hr.) (2 hrs. @ $12 per 47,200 lbs. @ $7.20 per lb. 15,300 hrs. @ $16.40 per 1,93,600 7,800 Units manufactured Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.

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 per pound $ 36 Direct labor: 3 hours at $12 per hour 36 Variable overhead: 3 hours at $8 per hour 24 Total standard variable cost per unit $ 96 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and Shipping expenses Fixed Cost per Variable Cost per Month Unit Sold $ 2,30,000 $ 1,60,000 $ 15 $6 The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 33,000 units and incurred the following costs: a. Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct laborers worked 58,000 hours at a rate of $13 per hour. c. Total variable manufacturing overhead for the month was $729,060. d. Total advertising, sales salaries, and commissions, and shipping expenses were $240,000, $470,000, and $145,000, respectively. What is the spending variance related to sales salaries and commissions?A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $7 per lb.) Direct labor Overhead (2hrs. @ $16 per hr.) (2 hrs. @ $12 per 47,200 lbs. @ $7.20 per lb. 15,300 hrs. @ $16.40 per 1,93,600 7,800 Units manufactured Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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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 per pound $ 36 Direct labor: 3 hours at $12 per hour 36 Variable overhead: 3 hours at $8 per hour 24 Total standard variable cost per unit $ 96 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and Shipping expenses Fixed Cost per Variable Cost per Month Unit Sold $ 2,30,000 $ 1,60,000 $ 15 $6 The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 33,000 units and incurred the following costs: a. Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct laborers worked 58,000 hours at a rate of $13 per hour. c. Total variable manufacturing overhead for the month was $729,060. d. Total advertising, sales salaries, and commissions, and shipping expenses were $240,000, $470,000, and $145,000, respectively. What is the spending variance related to sales salaries and commissions?A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $7 per lb.) Direct labor Overhead (2hrs. @ $16 per hr.) (2 hrs. @ $12 per 47,200 lbs. @ $7.20 per lb. 15,300 hrs. @ $16.40 per 1,93,600 7,800 Units manufactured Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.
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 per pound $ 36 Direct labor: 3 hours at $12 per hour 36 Variable overhead: 3 hours at $8 per hour 24 Total standard variable cost per unit $ 96 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and Shipping expenses Fixed Cost per Variable Cost per Month Unit Sold $ 2,30,000 $ 1,60,000 $ 15 $6 The planning budget for March was based on producing and selling 28,000 units. However, during March the company actually produced and sold 33,000 units and incurred the following costs: a. Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct laborers worked 58,000 hours at a rate of $13 per hour. c. Total variable manufacturing overhead for the month was $729,060. d. Total advertising, sales salaries, and commissions, and shipping expenses were $240,000, $470,000, and $145,000, respectively. What is the spending variance related to sales salaries and commissions?A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $7 per lb.) Direct labor Overhead (2hrs. @ $16 per hr.) (2 hrs. @ $12 per 47,200 lbs. @ $7.20 per lb. 15,300 hrs. @ $16.40 per 1,93,600 7,800 Units manufactured Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.
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