Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 9, Problem 7F15
Preble Company manufactures one product. Its variable manufacturing
The company also established the following cost formulas for its selling expenses: 
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:
page 42$
- Purchased 160.000 pounds of raw materials at a cost of S7.50 per pound. All of this material was used in production.
- Direct-laborers worked 55.000 hours at a rate of $15.00 per hour. Total variable manufacturing overhead for the month was S280.500.
Total advertising, sales salaries and commissions, and shipping expenses were S210,000, $455,000, and Si 15.000, respectively.
Required:
7. What is the direct labor variance for March?
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[The following information applies to the questions displayed below.]
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on
direct labour-hours, and its standard costs per unit are as follows:
Direct materials: 5 kg at $10.00 per kg
Direct labour: 2 hours at $15 per hour
Variable overhead: 2 hours at $5 per hour
Total standard cost per unit
The company planned to produce and sell 32,000 units in March. However, during March the company actually
produced and sold 37,600 units and incurred the following costs:
a. Purchased 200,000 kg of raw materials at a cost of $9.40 per kg. All of this material was used in production.
b. Direct labour: 75,000 hours at a rate of $16 per hour.
c. Total variable manufacturing overhead for the month was $558,750.
7. What is the variable overhead spending variance for March? (Do not round intermediate calculations. Round the actual overhead
rate to two decimal places. Indicate the effect of each…
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on
direct labour-hours, and its standard costs per unit are as follows:
Direct materials: 5 kg at $10.00 per kg
Direct labour: 2 hours at $15 per hour
Variable overhead: 2 hours at $5 per hour
Total standard cost per unit
The company planned to produce and sell 32,000 units in March. However, during March the company actually
produced and sold 37,600 units and incurred the following costs:
a. Purchased 200,000 kg of raw materials at a cost of $9.40 per kg. All of this material was used in production.
b. Direct labour: 75,000 hours at a rate of $16 per hour.
c. Total variable manufacturing overhead for the month was $558,750.
5. What is the labour rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)
Labour rate variance
Required information
[The following information applies to the questions displayed below.]
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct
labour-hours, and its standard costs per unit are as follows:
Direct materials: 5 kg at $10.00 per kg
Direct labour: 2 hours at $15 per hour
Variable overhead: 2 hours at $5 per hour
Total standard cost per unit
$50.00
30.00
10.00
$90.00
The company planned to produce and sell 32,000 units in March. However, during March the company actually produced
and sold 37,600 units and incurred the following costs:
a. Purchased 200,000 kg of raw materials at a cost of $9.40 per kg. All of this material was used in production.
b. Direct labour: 75,000 hours at a rate of $16 per hour.
c. Total variable manufacturing overhead for the month was $558,750.
1. What is the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for
unfavorable,…
Chapter 9 Solutions
Introduction To Managerial Accounting
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY