Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $8 per pound Direct labour: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour Total standard variable cost per unit $32 32 12 $76 Fixed overhead was budgeted at $609,000. Fixed overhead is applied on the basis of direct labour-hours. The company also established the following cost formulas for its selling expenses: Variable Cost per Unit Sold Fixed Cost per Month $320,000 $220,000 Advertising Sales salaries and commissions Shipping expenses $14.00 $ 3.00 The static (i.e., planning) budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production. b. Direct-labourers worked 67,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $422,100. And fixed manufacturing overhead was $604,000. d. Total advertising, sales salaries and commissions, and shipping expenses were $321,000, $731,000, and $127,000, respectively. Required: What is the materials quantity variance for March? (Input the amount as a positive value. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance.).)
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $8 per pound Direct labour: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour Total standard variable cost per unit $32 32 12 $76 Fixed overhead was budgeted at $609,000. Fixed overhead is applied on the basis of direct labour-hours. The company also established the following cost formulas for its selling expenses: Variable Cost per Unit Sold Fixed Cost per Month $320,000 $220,000 Advertising Sales salaries and commissions Shipping expenses $14.00 $ 3.00 The static (i.e., planning) budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production. b. Direct-labourers worked 67,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $422,100. And fixed manufacturing overhead was $604,000. d. Total advertising, sales salaries and commissions, and shipping expenses were $321,000, $731,000, and $127,000, respectively. Required: What is the materials quantity variance for March? (Input the amount as a positive value. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance.).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
Transcribed Image Text:Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours
and its standard cost card per unit is as follows:
$32
Direct material: 4 pounds at $8 per pound
Direct labour: 2 hours at $16 per hour
Variable overhead: 2 hours at $6 per hour
Total standard variable cost per unit
32
12
$76
Fixed overhead was budgeted at $609,000. Fixed overhead is applied on the basis of direct labour-hours. The company also
established the following cost formulas for its selling expenses:
Variable Cost per
Unit Sold
Fixed Cost
Advertising
Sales salaries and commissions
Shipping expenses
per Month
$320,000
$220,000
$14.00
$ 3.00
The static (i.e., planning) budget for March was based on producing and selling 32,000 units. However, during March the company
actually produced and sold 37,000 units and incurred the following costs:
a. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production.
b. Direct-labourers worked 67,000 hours at a rate of $17 per hour.
c. Total variable manufacturing overhead for the month was $422,100. And fixed manufacturing overhead was $604,000.
d. Total advertising, sales salaries and commissions, and shipping expenses were $321,000, $731,000, and $127,000, respectively.
Required:
What is the materials quantity variance for March? (Input the amount as a positive value. Leave no cells blank - be certain to enter
"0" wherever required. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for
no effect (i.e., zero variance.).)
Materials quantity variance
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education