Question

You received partial credit in the previous attempt. 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 58.00 per pound Direct labor: 2 hours at $14 per hour Variable overhead: 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 Shipping expenses issions $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: a. Purchased 160,000 pounds of raw materials at a cost of $750 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 Total variable manufacturing overhead for the month was $280,500 d. Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115.000 respectively Foundational 9-15 15 What is the spending variance related to shipping expenses indicate the effect of each variance by selecting "F" for favorable "U" for unfavorable, and "None" for no effect the zero variance.). Input the amount as a positive value) Spending variance related to shipping expenses $ 40.000

Answer 1

Solution 15:

Spending variance for shipping expenses = Budgeted shipping expense for actual activity - Actual shipping expense

= (30000*$3) - $115,000 = $25,000 U