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 $12 per hour 36.00 Variable overhead: 3 hours at $8 per hour 24.00 Total standard variable cost per unit $ 96.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 230,000 Sales salaries and commissions $ 160,000 $ 15.00 Shipping expenses $ 6.00 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: Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. Direct-laborers worked 58,000 hours at a rate of $13.00 per hour. Total variable manufacturing overhead for the month was $729,060. Total advertising, sales salaries and commissions, and shipping expenses were $240,000, $470,000, and $145,000, respectively. What is the direct labor efficiency variance for March?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

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 $12 per hour	36.00
Variable overhead: 3 hours at $8 per hour	24.00
Total standard variable cost per unit	$ 96.00

The company also established the following cost formulas for its selling expenses:

	Fixed Cost per Month	Variable Cost per Unit Sold
Advertising	$ 230,000
Sales salaries and commissions	$ 160,000	$ 15.00
Shipping expenses		$ 6.00

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:

Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.
Direct-laborers worked 58,000 hours at a rate of $13.00 per hour.
Total variable manufacturing overhead for the month was $729,060.
Total advertising, sales salaries and commissions, and shipping expenses were $240,000, $470,000, and $145,000, respectively.

What is the direct labor efficiency variance for March?

Expert Solution