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Question:89 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: Advertising Sales salaries and Shipping expenses Fixed Cost per Month Variable Cost per Unit Sold $ 3,00,000 $ 2,00,000 $ 12 $4 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, commissions, and shipping expenses were $308,000, $480,000, and $106,000, respectively.Required:What is the spending variance related to advertising? Accounting records indicate certain balances in the inventory accounts for 20xx: 1/1/xx 31/12/xx Materials inventory $ 25,000 $12,000 Inventory of products in process (Work in -0- $23,000 $10,000 $25,000 Inventory of finished products Other data (apply to the period from 1/1/xx to 31/12/xx) are: 1. The prime costs were $393,000. 2. Ten times the amount of what was in stock inventory at the beginning of the year was purchased in materials. 3. Costs of direct labor (direct labor), which represent 40% of the conversion costs, were $325,000. 4. The company generates, on average, a 20% gross profit (Gross margin). Calculate the following item for 20xx: Cost of materials used (direct materials used).

Question:89 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: Advertising Sales salaries and Shipping expenses Fixed Cost per Month Variable Cost per Unit Sold $ 3,00,000 $ 2,00,000 $ 12 $4 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, commissions, and shipping expenses were $308,000, $480,000, and $106,000, respectively.Required:What is the spending variance related to advertising? Accounting records indicate certain balances in the inventory accounts for 20xx: 1/1/xx 31/12/xx Materials inventory $ 25,000 $12,000 Inventory of products in process (Work in -0- $23,000 $10,000 $25,000 Inventory of finished products Other data (apply to the period from 1/1/xx to 31/12/xx) are: 1. The prime costs were $393,000. 2. Ten times the amount of what was in stock inventory at the beginning of the year was purchased in materials. 3. Costs of direct labor (direct labor), which represent 40% of the conversion costs, were $325,000. 4. The company generates, on average, a 20% gross profit (Gross margin). Calculate the following item for 20xx: Cost of materials used (direct materials used).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question:89 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: Advertising Sales salaries and Shipping expenses Fixed Cost per Month Variable Cost per Unit Sold $ 3,00,000 $ 2,00,000 $ 12 $4 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, commissions, and shipping expenses were $308,000, $480,000, and $106,000, respectively.Required:What is the spending variance related to advertising? Accounting records indicate certain balances in the inventory accounts for 20xx: 1/1/xx 31/12/xx Materials inventory $ 25,000 $12,000 Inventory of products in process (Work in -0- $23,000 $10,000 $25,000 Inventory of finished products Other data (apply to the period from 1/1/xx to 31/12/xx) are: 1. The prime costs were $393,000. 2. Ten times the amount of what was in stock inventory at the beginning of the year was purchased in materials. 3. Costs of direct labor (direct labor), which represent 40% of the conversion costs, were $325,000. 4. The company generates, on average, a 20% gross profit (Gross margin). Calculate the following item for 20xx: Cost of materials used (direct materials used).
Transcribed Image Text:Question:89 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: Advertising Sales salaries and Shipping expenses Fixed Cost per Month Variable Cost per Unit Sold $ 3,00,000 $ 2,00,000 $ 12 $4 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, commissions, and shipping expenses were $308,000, $480,000, and $106,000, respectively.Required:What is the spending variance related to advertising? Accounting records indicate certain balances in the inventory accounts for 20xx: 1/1/xx 31/12/xx Materials inventory $ 25,000 $12,000 Inventory of products in process (Work in -0- $23,000 $10,000 $25,000 Inventory of finished products Other data (apply to the period from 1/1/xx to 31/12/xx) are: 1. The prime costs were $393,000. 2. Ten times the amount of what was in stock inventory at the beginning of the year was purchased in materials. 3. Costs of direct labor (direct labor), which represent 40% of the conversion costs, were $325,000. 4. The company generates, on average, a 20% gross profit (Gross margin). Calculate the following item for 20xx: Cost of materials used (direct materials used).
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