Question

Required information

[The following information applies to the questions displayed below.]

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $11.00 per kg	$	55.00
Direct labour: 3 hours at $12 per hour		36.00
Variable overhead: 3 hours at $7 per hour		21.00
Total standard cost per unit	$	112.00

The company planned to produce and sell 21,000 units in March. However, during March the company actually produced and sold 26,600 units and incurred the following costs:

1. Purchased 154,000 kg of raw materials at a cost of $9.50 per kg. All of this material was used in production.

2. Direct labour: 63,000 hours at a rate of $13 per hour.

3. Total variable manufacturing overhead for the month was $510,930.

1. What is the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

Required information

[The following information applies to the questions displayed below.]

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $11.00 per kg	$	55.00
Direct labour: 3 hours at $12 per hour		36.00
Variable overhead: 3 hours at $7 per hour		21.00
Total standard cost per unit	$	112.00

The company planned to produce and sell 21,000 units in March. However, during March the company actually produced and sold 26,600 units and incurred the following costs:

1. Purchased 154,000 kg of raw materials at a cost of $9.50 per kg. All of this material was used in production.

2. Direct labour: 63,000 hours at a rate of $13 per hour.

3. Total variable manufacturing overhead for the month was $510,930.

2. What is the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)

Required information

[The following information applies to the questions displayed below.]

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $11.00 per kg	$	55.00
Direct labour: 3 hours at $12 per hour		36.00
Variable overhead: 3 hours at $7 per hour		21.00
Total standard cost per unit	$	112.00

The company planned to produce and sell 21,000 units in March. However, during March the company actually produced and sold 26,600 units and incurred the following costs:

1. Purchased 154,000 kg of raw materials at a cost of $9.50 per kg. All of this material was used in production.

2. Direct labour: 63,000 hours at a rate of $13 per hour.

3. Total variable manufacturing overhead for the month was $510,930.

3. If Preble had purchased 178,000 kg of materials at $9.50 per kg and used 154,000 kg in production, what would be the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)

Required information

[The following information applies to the questions displayed below.]

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $11.00 per kg	$	55.00
Direct labour: 3 hours at $12 per hour		36.00
Variable overhead: 3 hours at $7 per hour		21.00
Total standard cost per unit	$	112.00

The company planned to produce and sell 21,000 units in March. However, during March the company actually produced and sold 26,600 units and incurred the following costs:

1. Purchased 154,000 kg of raw materials at a cost of $9.50 per kg. All of this material was used in production.

2. Direct labour: 63,000 hours at a rate of $13 per hour.

3. Total variable manufacturing overhead for the month was $510,930.

4. If Preble had purchased 178,000 kg of materials at $9.50 per kg and used 154,000 kg in production, what would be the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)

Required information

[The following information applies to the questions displayed below.]

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $11.00 per kg	$	55.00
Direct labour: 3 hours at $12 per hour		36.00
Variable overhead: 3 hours at $7 per hour		21.00
Total standard cost per unit	$	112.00

The company planned to produce and sell 21,000 units in March. However, during March the company actually produced and sold 26,600 units and incurred the following costs:

1. Purchased 154,000 kg of raw materials at a cost of $9.50 per kg. All of this material was used in production.

2. Direct labour: 63,000 hours at a rate of $13 per hour.

3. Total variable manufacturing overhead for the month was $510,930.

5. What is the labour rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)

Required information

[The following information applies to the questions displayed below.]

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:

Direct materials: 5 kg at $11.00 per kg	$	55.00
Direct labour: 3 hours at $12 per hour		36.00
Variable overhead: 3 hours at $7 per hour		21.00
Total standard cost per unit	$	112.00

The company planned to produce and sell 21,000 units in March. However, during March the company actually produced and sold 26,600 units and incurred the following costs:

1. Purchased 154,000 kg of raw materials at a cost of $9.50 per kg. All of this material was used in production.

2. Direct labour: 63,000 hours at a rate of $13 per hour.

3. Total variable manufacturing overhead for the month was $510,930.

6. What is the labour efficiency variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.)

Answer 1

Solution 1:

Materials price variance for March = (SP - AP) * AQ = ($11 - $9.50) * 154000 = $231,000 F

Solution 2:

Materials quantity variance for March = (SQ - AQ) * SP = (26600*5 - 154000) * $11 = $231,000 U

Solution 3:

If Preble had purchased 184,000 pounds of materials at $8.50 per pound and used 180,000 pounds in production, materials price variance for March = (SP - AP) * AQ Purchased = ($11 - $9.50) * 178000 = $267,000 F

Solution 4:

If Preble had purchased 178,000 pounds of materials at $9.50 per pound and used 154,000 pounds in production, materials quantity variance for March = (SQ - AQ used) * SP = (26600*5 - 154000) * $11 = $231,000 U

Solution 5:

Direct labor rate variable for march = (SR - AR) * AH = ($12 - $13)* 63000 = $63,000 U

Solution 6:

direct labor efficiency variance for March = (SH - AH) * SR = (26600*3 - 63000) * $12 = $201,600 F