Question

Required information The Foundational 15 [LO9-1, LO9-2, LO9-4, 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 material: 5 pounds at $8.00 per pound Direct labor: 2 hours at $14 per hour Variable overheadı 2 hours at 55 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 $ 200,000 $100,000 Variable Cost per Unit Sold Advertising Sales salaries and commissions Shipping expenses $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 5210,000, $455.000, and $115.000, respectively Foundational 9-13 13. What is the spending variance related to advertising? (Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect zero variance). Input the amount as a positive value) Spending variance related to deling

Answer 1

Solution:

13)Calculation of advertising spending variance

Actual advertising expense = 210,000

Budgeted advertising expense = fixed cost budgeted

=200,000

Therefore spending variance relates to advertising expense = Actual - Budgeted

= 210,000 - 200,000

=$10,000 unfavorable

14)Calculation of sales salaries and commission spending variance

Actual sales salaries and commission expense =$455,000

Budgeted sales salaries and commission expense = Fixed cost budgeted + variable cost per unit * total no of units sold

=100,000 +12*25,000

=$400,000

therefore spending variance related to advertising expense = Actual - Budgeted

= 455,000 - 400,000

=$55,000 unfavorable

15)calculation of shipping expense spending variance

Actual shipping expense=115,000

Budgeted shipping expense = variable cost per unit * total no of units sold

= 3*25,000

=75,000

Therefore spending variance related to advertising expense = Actual - Budgeted

= 115,000 - 75,000

=40,000 unfavorable