[The following information applies to the questions displayedbelow.] Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-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 $16.00 per hour 48.00 Variable overhead: 3 hours at$8.00 per hour 24.00 Total standard variable cost per unit $ 108.00The company also established the following cost formulas for itsselling expenses: Fixed Cost per Month Variable Cost per Unit SoldAdvertising $ 230,000 Sales salaries and commissions $ 270,000 $14.00 Shipping expenses $ 4.00 The planning budget for March wasbased on producing and selling 28,000 units. However, during Marchthe company actually produced and sold 33,000 units and incurredthe following costs: a. Purchased 165,000 pounds of raw materialsat a cost of $7.20 per pound. All of this material was used inproduction. b. Direct-laborers worked 87,000 hours at a rate of$17.00 per hour. c. Total variable manufacturing overhead for themonth was $729,060. d. Total advertising, sales salaries andcommissions, and shipping expenses were $233,000, $729,060, and$144,000, respectively.
8. What is the direct labor rate variance for March?
[The following information applies to the questions displayedbelow.] Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-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 $16.00 per hour 48.00 Variable overhead: 3 hours at$8.00 per hour 24.00 Total standard variable cost per unit $ 108.00The company also established the following cost formulas for itsselling expenses: Fixed Cost per Month Variable Cost per Unit SoldAdvertising $ 230,000 Sales salaries and commissions $ 270,000 $14.00 Shipping expenses $ 4.00 The planning budget for March wasbased on producing and selling 28,000 units. However, during Marchthe company actually produced and sold 33,000 units and incurredthe following costs: a. Purchased 165,000 pounds of raw materialsat a cost of $7.20 per pound. All of this material was used inproduction. b. Direct-laborers worked 87,000 hours at a rate of$17.00 per hour. c. Total variable manufacturing overhead for themonth was $729,060. d. Total advertising, sales salaries andcommissions, and shipping expenses were $233,000, $729,060, and$144,000, respectively.
| 8. | What is the direct labor rate variance for March? |
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| 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 $16.00 per hour | 48.00 | |
| Variable overhead: 3 hours at $8.00 per hour | 24.00 | |
| Total standard variable cost per unit | $ | 108.00 |
| 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 | $ | 270,000 | $ | 14.00 | ||
| Shipping expenses | $ | 4.00 | ||||
| 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: |
| a. | Purchased 165,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. | |||
| b. | Direct-laborers worked 87,000 hours at a rate of $17.00 per hour. | |||
| c. | Total variable manufacturing overhead for the month was $729,060. | |||
| d. | Total advertising, sales salaries and commissions, and shipping expenses were $233,000, $729,060, and $144,000, respectively. 1. What raw materials cost would be included in the companyâs flexible budget for March? Raw Material Cost_______
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