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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 materials: 4 pounds at $9 per pound $ 36
Direct labor: 3 hours at $12 per hour 36
Variable overhead: 3 hours at $8 per hour 24
Total standard cost per unit $ 96
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 58,000 hours at a rate of $13 per hour.

c.
Total variable manufacturing overhead for the month was $729,060.

1. What raw materials cost would be included in the company’s planning budget for March?
2. What raw materials cost would be included in the company’s flexible budget for March?
3.
What is the materials price 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.).)

4.
What is the materials quantity 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.).)

5.
If Preble had purchased 173,000 pounds of materials at $7.20 per pound and used 165,000 pounds in production, what would be the materials price 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.)

6.
If Preble had purchased 173,000 pounds of materials at $7.20 per pound and used 165,000 pounds in production, what would be the materials quantity 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.)

7.
What direct labor cost would be included in the company’s planning budget for March?

8.
What direct labor cost would be included in the company’s flexible budget for March?

9.
What is the 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.). Do not round intermediate calculations.)

10.
What is the labor efficiency 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.)

11.
What is the labor spending 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.)

12.
What variable manufacturing overhead cost would be included in the company’s planning budget for March?

13.
What variable manufacturing overhead cost would be included in the company’s flexible budget for March?

14.
What is the variable overhead rate variance for March? (Round the actual overhead rate to two decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

15.
What is the variable overhead efficiency variance for March? (Do not round intermediate calculations. Round the actual overhead rate to two decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

Respuesta :

Answer:

Explanation:

1. Raw materials cost to be included in the planning budget for March = 28,000 x $ 36 = $ 1,008,000

2. Raw materials cost to be included in the flexible budget for March = 33,000 x $ 36 = $ 1,188,000

3. Materials price variance for March = ( Standard price per unit - Actual price per unit ) x Actual quantity purchased = $ ( 9.00 - 7.20) x 165,000 pounds = $ 297,000 F

4. Materials quantity variance for March = ( standard quantity allowed for actual output - actual quantity used ) x standard price per unit = ( 132,000 - 165,000) x $ 9 = $ 297,000 U

5. Materials price variance = $ ( 9 - 7.20) x 173,000 = $ 311,400 F

6. Materials quantity variance = ( 132,000 - 165,000) x $ 9 = $ 297,000 U

7. Direct labor cost included in the planning budget for March = 28,000 x $ 36 = $ 1,008,000

8. Direct labor cost included in the flexible budget for March = 33,000 x $ 36 = $ 1,188,000

9. Labor rate variance for March = ( standard labor hour rate - actual labor hour rate ) x actual hours used = $ ( 12.00 - 13.00 ) x 58,000 = $ 58,000 U

10. Labor efficiency variance for March = ( standard hours allowed for actual output - actual hours used ) x standard labor hour rate = ( 3 x 33,000 - 58,000) x $ 12 = $ 492,000 F

11. Labor spending variance for March = $ 492,000 F + $ 58,000 U = $ 434,000 F

12. Variable manufacturing overhead cost to be included in the planning budget for March = 28,000 x $ 24 = $ 672,000

13. Variable manufacturing overhead included in the flexible budget for March = 33,000 x $ 24 = $ 792,000

14. Variable overhead rate variance for March = $ ( 8 - 12.57) x 58,000 = $ 265,060 U

15. Variable overhead efficiency variance for March = ( 3 x 33,000 - 58,000) x $ 8 = $ 328,000

"When the variable manufacturing is applied to production direct labor-hours and its standard cost card per unit is as follows To Understand more check below".

Calculation of Standard Cost Card Per Unit

1. Raw materials cost to be included in the planning budget for March = (Standard price per unit ×Actual price per unit) 28,000 x $36 is = $1,008,000

2. Raw materials cost to be included in the flexible budget for March = 33,000 x $36 is = $1,188,000

3. When the Materials price variance for March formula is = (Standard price per unit - Actual price per unit) x Actual quantity purchased is = $ (9.00 - 7.20) x 165,000 pounds is = $297,000 F

4. Then, Materials quantity variance for March formula is = (standard quantity allowed for actual output - actual quantity used) x standard price per unit = ( 132,000 - 165,000) x $9 is = $297,000 U

5. After that, Materials price variance is = $(9 - 7.20) x 173,000 = $311,400 F

6. Materials quantity variance is = (132,000 - 165,000) x $9 = $297,000 U

7. Then, the Direct labor cost included in the planning budget for March = 28,000 x $36 is = $1,008,000

8. Direct labor cost included in the flexible budget for March = 33,000 x $36 is = $1,188,000

9. Now, The Labor rate variance for March is = ( standard labor hour rate - actual labor hour rate ) x actual hours used is = $(12.00 - 13.00 ) x 58,000 = $58,000 U

10. Labor efficiency variance for March = (standard hours allowed for actual output - actual hours used) x standard labor hour rate is = ( 3 x 33,000 - 58,000) x $12 = $492,000 F

11. Labor spending variance for March is = $492,000 F + $ 58,000 U = $434,000 F

12. When the Variable manufacturing overhead cost to be included in the planning budget for March is = 28,000 x $24 = $672,000

13. Variable manufacturing overhead included in the flexible budget for March = 33,000 x $24 is = $792,000

14. Then, Variable overhead rate variance for March is = $(8 - 12.57) x 58,000 = $265,060 U

15. Variable overhead efficiency variance for March is = (3 x 33,000 - 58,000) x $8 = $328,000

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