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 $9 per pound |
$ |
45 |
| Direct labor: 3 hours at $14 per hour |
|
42 |
| Variable overhead: 3 hours at $9 per hour |
|
27 |
|
|
|
| Total standard variable cost per unit |
$ |
114 |
|
|
|
|
|
The company also established the following cost formulas for its selling expenses:
|
|
Fixed Cost per Month |
|
Variable Cost per Unit Sold |
| Advertising |
$ |
300,000 |
|
|
|
|
| Sales salaries and commissions |
$ |
200,000 |
|
$ |
12.00 |
|
| Shipping expenses |
|
|
|
$ |
4.00 |
|
|
| The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,800 units and incurred the following costs: |
| a. |
Purchased 155,000 pounds of raw materials at a cost of $7.2 per pound. All of this material was used in production. |
| b. |
Direct-laborers worked 65,000 hours at a rate of $15 per hour. |
| c. |
Total variable manufacturing overhead for the month was $612,000. |
| d. |
Total advertising, sales salaries and commissions, and shipping expenses were $308,000, $480,000, and $106,000, respectively. |
| Required: |
| What variable manufacturing overhead cost would be included in the company's flexible budget for March? |
| a. |
Purchased 155,000 pounds of raw materials at a cost of $7.2 per pound. All of this material was used in production. |
| b. |
Direct-laborers worked 65,000 hours at a rate of $15 per hour. |
| c. |
Total variable manufacturing overhead for the month was $612,000. |
| d. |
Total advertising, sales salaries and commissions, and shipping expenses were $308,000, $480,000, and $106,000, respectively. |
| Required: |
| What variable manufacturing overhead cost would be included in the company's flexible budget for March? |