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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 $7.00 per pound Direct labor: 3 hours at $16 per hour Variable overhead: 3 hours at $4 per hour Total standard variable cost per unit $ 35.00 48.00 12.00 $ 95.00 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Variable Fixed Cost per Cost per Month Unit Sold $ 360,000 $ 420,000 $ 28.00 $ 19.00 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs: a. Purchased 175,000 pounds of raw materials at a cost of $6.80 per pound. All of this material was used in production. b. Direct-laborers worked 71,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $340,090. d. Total advertising, sales salaries and commissions, and shipping expenses were $370,000, $535,000, and $275,000, respectively. Required: 1. What raw materials cost would be included in the company's flexible budget for March?

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 $7.00 per pound Direct labor: 3 hours at $16 per hour Variable overhead: 3 hours at $4 per hour Total standard variable cost per unit $ 35.00 48.00 12.00 $ 95.00 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Variable Fixed Cost per Cost per Month Unit Sold $ 360,000 $ 420,000 $ 28.00 $ 19.00 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs: a. Purchased 175,000 pounds of raw materials at a cost of $6.80 per pound. All of this material was used in production. b. Direct-laborers worked 71,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $340,090. d. Total advertising, sales salaries and commissions, and shipping expenses were $370,000, $535,000, and $275,000, respectively. Required: 1. What raw materials cost would be included in the company's flexible budget for March?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EB: Baxter Company has a relevant range of production between 15,000 and 30,000 units. The following...
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Vishnu 

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 $7.00 per pound Direct labor: 3 hours at $16 per hour Variable overhead: 3 hours at $4 per hour Total standard variable cost per unit $ 35.00 48.00 12.00 $ 95.00 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Variable Fixed Cost per Cost per Month Unit Sold $ 360,000 $ 420,000 $ 28.00 $ 19.00 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs: a. Purchased 175,000 pounds of raw materials at a cost of $6.80 per pound. All of this material was used in production. b. Direct-laborers worked 71,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $340,090. d. Total advertising, sales salaries and commissions, and shipping expenses were $370,000, $535,000, and $275,000, respectively. Required: 1. What raw materials cost would be included in the company's flexible budget for March?
Transcribed Image Text: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 $7.00 per pound Direct labor: 3 hours at $16 per hour Variable overhead: 3 hours at $4 per hour Total standard variable cost per unit $ 35.00 48.00 12.00 $ 95.00 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Variable Fixed Cost per Cost per Month Unit Sold $ 360,000 $ 420,000 $ 28.00 $ 19.00 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs: a. Purchased 175,000 pounds of raw materials at a cost of $6.80 per pound. All of this material was used in production. b. Direct-laborers worked 71,000 hours at a rate of $17.00 per hour. c. Total variable manufacturing overhead for the month was $340,090. d. Total advertising, sales salaries and commissions, and shipping expenses were $370,000, $535,000, and $275,000, respectively. Required: 1. What raw materials cost would be included in the company's flexible budget for March?
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