Question

Required information [The following Information applies to the questions displayed below.] Preble Company manufactures one productIts variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: $50.00 64.00 Direct material: 5 pounds at $10.00 per pound Direct labor: 4 hours at $16 per hour Variable overhead: 4 hours at $7 per hour Total standard variable cost per unit 28.00 $142.00 The company also established the following cost formulas for its selling expenses: Variable Cost per Unit Sold Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $ 220,000 $ 140,000 $14.00 $ 5.00 The planning budget for March was based on producing and selling 20.000 units. However, during March the company actually produced and sold 24,600 units and incurred the following costs: a. Purchased 164.000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production b. Direct-laborers worked 57,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $653,220. d. Total advertising, sales salaries and commissions, and shipping expenses were $235.000. $465.000, and $135,000. respectively. 13. What is the spending varlance related to advertising? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance.). Input the amount as a positive value.) Spending variance related to advertising

Answer 1

Solution 13:

Spending variance related to advertising = Budgeted advertising cost - Actual advertising cost

= $220,000 - $235,000 = $15,000 Unfavorable.

solution 14:

Spending variance related to sales salaries and commissions = Budgeted expenses for actual sales - Actual expenses

= ($140,000 + 24600*$14) - $465,000 = $19,400 Favorable.