Question

5. If Preble had purchased 182,000 pounds of materials at $7.40 per pound and used 160,000 pounds in production, what would be the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 6. If Preble had purchased 182,000 pounds of materials at $7.40 per pound and used 160,000 pounds in production, what would be the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 7. What direct labor cost would be included in the company's planning budget for March? 8. What direct labor cost would be included in the company's flexible budget for March? 9. What is the labor rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 10. What is the labor efficiency variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 11. What is the labor spending variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 12. What variable manufacturing overhead cost would be included in the company's planning budget for March? 13. What variable manufacturing overhead cost would be included in the company's flexible budget for March? 14. What is the variable overhead rate variance for March? (Round the actual overhead rate to two decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) 15. What is the variable overhead efficiency variance for March? (Round the actual overhead rate to two decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.)

Answer 1

Solution:

5.)

Materials price variance = Actual quantity × (Standard price - Actual Price)

= 182,000 × ($8.00 - $7.40)

= 182000 × $0.60

= $109,200 Favorable

6.)

Materials quantity variance = Standard price × (Standard quantity -Actual quantity)

= $8 × (37000 × 4 - 160,000)

= $8 × (148000 - 160,000)

= $8 × 12000

= $96,000 Unfavorable

7.)

Direct labor cost would be included in the company's planning budget

= $32 ×32,000 units

= $1,024,000

8.)

Direct labor cost included in flexible budget

=$32 × 37000 units

= $1,184,000

9.)

Labor rate variance = Actual labor hours × (Standard price - Actual price)

= 67,000 × ($16 - $17)

= 67,000 × $1

= $67,000 Unfavorable