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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 $11.00 per pound
$ 55.00
Direct labor: 3 hours at $12 per hour
36.00
Variable overhead: 3 hours at $7 per hour
21.00
Total standard variable cost per unit
$ 112.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost per Month
Variable Cost per Unit Sold
Advertising
$ 280,000
Sales salaries and commissions
$ 260,000
$ 20.00
Shipping expenses
$ 11.00
The planning budget for March was based on producing and selling 21,000 units. However, during March the company actually produced and sold 26,600 units and incurred the following costs:W the month was $510,930.
Total advertising, sales salaries and commissions, and shipping expenses were $286,000, $495,000, and $195,000,
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