Question

* You received no credit for this question in the previous attempt Required information The Foundational 15 (LO9-1, LO9-2, L09-4, LO9-5, LO9-6] 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 unit is as follows: Direct ateriat 5 pounds at 58.00 per pound Direct labori 2 hours at 514 per hour Variable overhead 2 hours at $5 per hour Total standard variable cost per unit $40.00 28.00 10.00 $78.00 The company also established the following cost formulas for its selling expenses Fixed Cost per Month Variable cost er Unit Sold advertising sales salaries and commissions Shipping expenses $ 100.000 $12.00 $ 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 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, 5455.000 and $115.000 respectively, Foundational 9-14 14. What is the spending variance related to sales salaries and commissions (indicate the effect of each variance by selecting" favorable, "U" for unfavorable, and "None" for no effect the zero variance Input the amount as a positive value

Answer 1

Solution:

Sales salaries and commissions for Flexible budget = 30000 units* $12 + $100,000 = $460,000

Actual Sales salaries and commissions = $455,000

Spending Variance for Sales salaries sand commissions = Sales salaries and commissions for Flexible budget - Actual Sales salaries and commissions

= $460000 - $455000 = $5,000 Favorable