[The following information applies to the questionsdisplayed below.]
Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-hours and its standard cost card per unit is as follows:
| |
| Direct materials: 4 pounds at $8 per pound | $ | 32 |
| Direct labor: 2 hours at $16 per hour | | 32 |
| Variable overhead: 2 hours at $6 per hour | | 12 |
| Total standard cost per unit | $ | 76 |
|
The planning budget for March was based on producing and selling32,000 units. However, during March the company actually producedand sold 37,000 units and incurred the following costs:
- Purchased 160,000 pounds of raw materials at a cost of $7.40per pound. All of this material was used in production.
Direct laborers worked 67,000 hours at a rate of $17 perhour.
Total variable manufacturing overhead for the month was$422,100.
1. What raw materials cost would be included in the company’splanning budget for March?
2. What raw materials cost would be included in the company’sflexible budget for March?
3. What is the materials price variance for March?(Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance.). Input all amounts as positivevalues.)
4. What is the materials quantity variance for March?(Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance.). Input all amounts as positivevalues.)
