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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Preble Company manufactures one product. Its variable manufacturing
| 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.
2. What is the materials quantity variance for March?
Expert Solution
Step 1
calculation of material quantity variance for march are as follows
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