Answer Happy

Find: direct labor efficiency variance, direct labor rate
variance, and variable overhead rate variance for March; spending
variance related to advertising/sales salaries and
commissions/shipping expenses.
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: $ 48.00 Direct material: 6 pounds at $8.00 per pound Direct labor: 4 hours at $13 per hour 52.00 20.00 Variable overhead: 4 hours at $5 per hour Total standard variable cost per unit $ 120.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 380,000 $ 460,000 Sales salaries and commissions Shipping expenses $ 30.00 $ 21.00 The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 25,500 units and incurred the following costs: a. Purchased 170,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct-laborers worked 73,000 hours at a rate of $14.00 per hour. c. Total variable manufacturing overhead for the month was $427,050. d. Total advertising, sales salaries and commissions, and shipping expenses were $386,000, $545,000, and $295,000, respectively.