Question

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 $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00 Total standard variable cost per unit $ 78.00

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 overhead: 2 hours at $5 per hour $40.00 28.00 10.00 $78.00 Total standard variable cost per unit The company also established the following cost formulas for its selling expenses: Variable Fixed Cost Cost per Unit Sold per Month. $ 200,000 $ 100,000 Advertising Sales salaries and commissions $12.00 3.00 Shipping expenses 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:

Answer 1

12.
	Flexible budget
Advertising	200000
Sales salaries and commissions [ 100000 + ( 12.00 * 30000 ) ]	460000
Shipping expenses [ ( 3.00 * 30000 ) ]	90000

13.
Spending variance related to advertising = Actual spending - Flexible budget = 210000 - 200000	10000	U
14.
Spending variance related to sales salaries and commission = Actual spending - Flexible budget = 455000 - 460000	5000	F
15.
Spending variance related to shipping expenses = Actual spending - Flexible budget = 115000 - 90000	25000	U