Chapter 9, Problem 7F15

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:

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:
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1. Purchased 160.000 pounds of raw materials at a cost of S7.50 per pound. All of this material was used in production.
2. 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?