The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,600 units and incurred the following costs: a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $653,220. d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000, respectively.
The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,600 units and incurred the following costs: a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $653,220. d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000, respectively.
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EB: Baxter Company has a relevant range of production between 15,000 and 30,000 units. The following...
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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: 5 pounds at $10.00 per pound $ 50.00
Direct labor: 4 hours at $16 per hour
Variable overhead: 4 hours at $7 per hour
Total standard variable cost per unit
64.00
28.00
$142.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per
Variable Cost per
Unit Sold
Month
$4
Advertising
Sales salaries and
commissions
Shipping expenses
220,000
140,000
$
14.00
$
5.00
The planning budget for March was based on producing and selling 20,000 units. However, during March the company
actually produced and sold 24,600 units and incurred the following costs:
a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour.
c. Total variable manufacturing overhead for the month was $653,220.
d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000,
respectively.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf7777fa-aa3c-4ddb-8a8c-67588cdbbf49%2F38e3aa35-a47d-4f2b-b4eb-fcae36177f86%2F0m7i9yj_processed.jpeg&w=3840&q=75)
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:
Direct material: 5 pounds at $10.00 per pound $ 50.00
Direct labor: 4 hours at $16 per hour
Variable overhead: 4 hours at $7 per hour
Total standard variable cost per unit
64.00
28.00
$142.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per
Variable Cost per
Unit Sold
Month
$4
Advertising
Sales salaries and
commissions
Shipping expenses
220,000
140,000
$
14.00
$
5.00
The planning budget for March was based on producing and selling 20,000 units. However, during March the company
actually produced and sold 24,600 units and incurred the following costs:
a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour.
c. Total variable manufacturing overhead for the month was $653,220.
d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000,
respectively.
![The planning budget for March was based on producing and selling 20,000 units. However, during March the company
actually produced and sold 24,600 units and incurred the following costs:
a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour.
c. Total variable manufacturing overhead for the month was $653,220.
d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000,
respectively.
8. What is the direct labor 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.). Input the amount as a positive value.)
Direct labor rate variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf7777fa-aa3c-4ddb-8a8c-67588cdbbf49%2F38e3aa35-a47d-4f2b-b4eb-fcae36177f86%2Fzy4ml8p_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The planning budget for March was based on producing and selling 20,000 units. However, during March the company
actually produced and sold 24,600 units and incurred the following costs:
a. Purchased 164,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour.
c. Total variable manufacturing overhead for the month was $653,220.
d. Total advertising, sales salaries and commissions, and shipping expenses were $235,000, $465,000, and $135,000,
respectively.
8. What is the direct labor 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.). Input the amount as a positive value.)
Direct labor rate variance
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