In: Accounting
Here is all of the info for these questions. Please do not answer these questions if you do not know what you are doing I have gotten a lot of wrong answers and have burned a lot of my questions on false answers. This is for a managerial accounting class. Thank you for your help.
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 $10.00 per pound $ 50.00 Direct labor: 2 hours at $13.00 per hour 26.00 Variable overhead: 2 hours at $8.00 per hour 16.00 Total standard variable cost per unit $ 92.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 400,000 Sales salaries and commissions $ 130,000 $ 11.00 Shipping expenses $ 3.00 The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,600 units and incurred the following costs: a. Purchased 200,000 pounds of raw materials at a cost of $9.40 per pound. All of this material was used in production. b. Direct-laborers worked 65,000 hours at a rate of $14.00 per hour. c. Total variable manufacturing overhead for the month was $525,000. d. Total advertising, sales salaries and commissions, and shipping expenses were $416,000, $525,200, and $135,000, respectively.
11. What is the variable overhead rate variance for March? (Do not round intermediate calculations. Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March? Units Sold = 37,600.00.
13. What is the spending variance related to advertising? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
14. What is the spending variance related to sales salaries and commissions? (Input the amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
15. What is the spending variance related to shipping expenses? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
Solution 11:
Standard direct labor hours for actual production = 37600*2 = 75200 hours
Actual direct labor hour = 65000 hours
Standard variable overhead rate = $8 per hour
Actual variable overhead rate = $525,000 / 65000 = $8.0769 per hour
Variable overhead rate variance = (SR - AR) * AP = ($8 - $8.0769) * 65000 = $5,000 U
Solution 12:
Amount of advertising expense to be included in company flexible budget = $400,000
Amount of Sales salaries and commissions to be included in company flexible budget = $130,000 + 37600*$11 = $543,600
Amount of Shipping expenses to be included in company flexible budget = 37600 * $3 = $112,800
Solution 13:
Spending variance related to advertising = Budgeted advertising cost for actual production - Actual advertising cost
= $400,000 - $416,000 = $16,000 U
Solution 14:
Spending variance related to sales salaries and commissions = Budgeted sales salaries and commissions for actual production - Actual cost of sales salaries and commissions
= $543,600 - $525,200 = $18,400 F
Solution 15:
Spending variance related to shipping expenses = Budgeted shipping expense for actual production - Actual cost of shipping expense
= $112,800 - $135,000 = $22,200 U