Flexible Budget and Variance Analysis for March: Raw Material,

School: Post University - Course: ACCT 211H - Subject: Accounting

Unit 6 - Chapter 9 Assignment(ACCT211H) 1.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:4 pounds at$10.00 per pound$40.00 Direct labor: 2 hours at $13 per hour26.00 Variable overhead: 2 hours at $9 per hour18.00 Total standard variable cost per unit$ 84.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per MonthVariable Cost per Unit Sold Advertising$ 240,000 Sales salaries and commissions $ 180,000$ 16.00 Shipping expenses$ 7.00 The planning budget for March was based on producing and selling 29,000 units. However, during March the company actually produced and sold34,000 units and incurred the following costs: Purchased160,000 pounds of raw materials at a cost of $8.50 per pound. All of this material was used in production. Direct-laborers worked 59,000 hours at a rate of $14.00 per hour. Total variable manufacturing overhead for the month was $564,040. Total advertising, sales salaries and commissions, and shipping expenses were $245,000, $475,000, and $155,000, respectively.1 What raw materials cost would be included in the company's flexible budget for March? Raw material cost $1,360,000 34000 x 40 =$1,360,000 2.What is the materials quantity variance for March? Materials quantity variance $240,000 U = ($10-8.50) *160,000 = $240,000 U 3.What is the materials price variance for March? Material price variance $240,000 F 4.If Preble had purchased 174,000 pounds of materials at $8.50 per pound and used 160,000 pounds in production, what would be the materials quantity variance for March? Materials quantity variance $240,000 U

5.If Preble had purchased 174,000 pounds of materials at $8.50 per pound and used 160,000 pounds in production, what would be the materials price variance for March? Materials price variance $261,000 F 6.What direct labor cost would be included in the company's flexible budget for March? Direct labor cost $884,0000 7.What is the direct labor efficiency variance for March? Direct labor efficiency variance $117,000 F 8.What is the direct labor rate variance for March? Direct labor rate variance $59,000 U 9.What variable manufacturing overhead cost would be included in the company's flexible budget for March? Variable manufacturing overhead cost $612,000 10.What is the variable overhead efficiency variance for March? Variable overhead efficiency variance $81,000 F 11.What is the variable overhead rate variance for March? Variable overhead rate variance $33,040 U 12.What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company's flexible budget for March? Advertising$240,000 Sales salaries and commissions$724,000 Shipping expenses$238,000 13.What is the spending variance related to advertising? Spending variance related to adverting $5,000 U 14.What is the spending variance related to sales salaries and commissions? Spending variance related to sales salaries and commissions $249,000 F 15.What is the spending variance related to shipping expenses? Spending variance related to shipping expense $83,000 F

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