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: Inputs Direct materials Direct labor Variable overhead Total standard cost per unit (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) 5 pounds $8.00 per pound $40.00 2 hours $14 per hour 28.00 2 hours $5 per hour 10.00 $78.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct laborers worked 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500.
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: Inputs Direct materials Direct labor Variable overhead Total standard cost per unit (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) 5 pounds $8.00 per pound $40.00 2 hours $14 per hour 28.00 2 hours $5 per hour 10.00 $78.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct laborers worked 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1) What is the materials price variance for March?
2) What is the material quantity variance for March?
3) What is the labor rate variance for March?
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:
Inputs
Direct materials
Direct labor
Variable overhead
Total standard cost per unit
(1) Standard Quantity or Hours
(2) Standard Price or Rate Standard Cost (1) × (2)
5 pounds
$8.00 per pound
$40.00
2 hours
$14 per hour
28.00
2 hours
$5 per hour
10.00
$78.00
The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced
and sold 30,000 units and incurred the following costs:
a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b. Direct laborers worked 55,000 hours at a rate of $15.00 per hour.
c. Total variable manufacturing overhead for the month was $280,500.
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