Question

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 $10.00 per pound $ 50.00 Direct labor: 4 hours at $16 per hour Variable overhead: 4 hours at $7 per hour 64.00 28.00 Total standard variable cost per unit $142.00 The company also established the following cost formulas for its selling expenses: Variable Fixed Cost Cost per per Month $ 220,000 140,000 Unit Sold Advertising Sales salaries and commissions $14.00 5.00 Shipping expenses 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 57,000o 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.

Answer 1

9) variable manufacturing overhead in flexible budget = 24600*28 = 688800

10) variable overhead efficiency variance = (24600*4-57000)*7 = 289800 F

11) variable overhead rate variance = (7*57000-653220) = 254220 U

12) Amount in flexible budget

Advertising	220000
Sales salaries and commissions (24600*14+140000)	484400
Shipping expense (24600*5)	123000