Direct material: 5 pounds at $8.00 per pound

$

40.00

  Direct labor: 2 hours at $14 per hour

28.00

  Variable overhead: 2 hours at $5 per hour

10.00

  Total standard variable cost per unit

$

78.00

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

Fixed Cost per Month

Variable Cost per Unit Sold

  Advertising

$

200,000

  Sales salaries and commissions

$

100,000

$

12.00

  Shipping expenses

$

3.00

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:

a.

Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.

b.

Direct-laborers worked 55,000 hours at a rate of $15.00 per hour.

c.

Total variable manufacturing overhead for the month was $280,500.

d.

Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000, respectively.

Required:

9. What variable manufacturing overhead cost would be included in the company?s flexible budget for March?

  Variable manufacturing overhead cost

$

10. What is the variable overhead efficiency variance for March? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

  Variable overhead efficiency variance

$   

11. What is the variable overhead rate variance for March? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

  Variable overhead rate variance

$   

12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company?s flexible budget for March?

Preble Company
Flexible Budget
For the Month Ended March 31

  Units sold (q)

30,000

  Expenses:

    Advertising

$

    Sales salaries and commissions

$

    Shipping expenses

$

14. What is the spending variance related to sales salaries and commissions? (Input the amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

  Spending variance     $   

15. What is the spending variance related to shipping expenses? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

  Spending variance    $