Question

The following information applies to the questions displayed below Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor hours and its standard cost card per unt is as follows Direct materials 6 pounds at 58 per pound Direct labor: 3 hours at $14 per hour Variable overhend 3 hours at $5 per hour Total standard cost per unit s 48 42 $ 105 The planning budget for March was based on producing and seling 19.000 units, However,during March the company actualy produced and sold 24.000 units and incurred the following costs a. Purchased 160,000 pounds of raw materials at a cost of $/20 per pound All of this material was used in production b. Direct laborers worked 60,000 hours at a rate of $15 pet hout C Total variable manufacturing overhead for the month was $336,600

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Answers are highlighted in yellow: Solution: Note: Amount sign can be negetive or possitive as per requirment of question Materials quantity/efficiency variance Standard Quantity (SQ) (24000 6 Actual Quantity (AQ) 144000 160000 $ 8.00 Standard Price (SP) 4) Materials quantity variance (SQ-AQ) Standard 128000 U Materials quantity/efficiency variance Standard Quantity (SQ) (24000 6 Actual Quantity (AQ) 144000 160000 $ 8.00 Standard Price (SP) 6) Materials quantity variance (SQ-AQ) Standard 128000 U 8) Direct Labor Cost 24000*3)*14 1008000 in flexbile budget. Labor quantity/efficiency variance: Standard Hours (SH) (24000*3) Actual Hours (AH) 72000 60000 $ 14.00 Standard Rate (SR) 10) Labor efficiency variance (SH-AH Standard Rate 168000IF