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 |
|
|
|
|
|
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, during March the company actually produced and sold 30,000 units and incurred the following costs:
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| a. |
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: |
|
What is the spending variance related to advertising? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
|
Spending variance $