# Introduction to Managerial Accounting: The Foundational 15, Unit 6 Chapter 8 – Preble Company

Introduction to Managerial Accounting
The Foundational 15
Unit 6 Chapter 8
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: 5.00 pounds \$8.00 per pound \$40.00 Direct labor: 2.00 hours \$14.00 per hour \$28.00 Variable overhead: 2.00 hours \$5.00 per hour \$10.00 Total standard cost per unit \$78.00 The company also established the following cost formulas for its selling expenses: Fixed cost per month Variable cost per unit sold Advertising \$200,000 Sales salaries and commissions \$100,000 \$12.00 Shipping expenses \$3.00 The planning budget for March was based on producing and selling 25,000 units. However, March the company actually produced and sold 30,000 units and incurred the following costs:. Purchased 160,000 pounds of raw materials at a cost of \$7.50 per pound. All of this material was used in production.
b. Direct-laborers worked 55,000 hours at a rate of \$15.00 per hour. c. Total variable manufacturing overhead for the month was \$280,500. d. Total advertising, sales salaries and commissions, and shipping expenses were \$210,000, \$455,000, and \$115,000, respectively.

Required:
1. What raw materials cost would be included in the company's flexible budget for March?
2. What is the materials quantity variance for March?
3. What is the materials price variance for March?
4. If Preble had purchased 170,000 pounds of materials at \$7.50 per pound and used 160,000 pounds in production, what would be the materials quantity variance for March?
5. If Preble had purchased 170,000 pounds of materials at \$7.50 per pound and used 160,000 pounds in production, what would be the materials price variance for March?
6. What direct labor cost would be included in the company's flexible budget for March?
7. What is the direct labor efficiency variance for March?
8. What is the direct labor rate variance for March? 9. What variable manufacturing overhead cost would be included in the company's flexible budget for March?
10. What is the variable overhead efficiency variance for March? 1
1. What is the variable overhead rate variance for March?
12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company's flexible budget for March?
13. What is the spending variance related to advertising?
14. What is the spending variance related to sales salaries and commissions?
15. What is the spending variance related to shipping expenses?