Business
Business, 09.04.2020 22:57, tiana02q

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 $10.00 per pound $ 50.00
Direct labor: 3 hours at $17.00 per hour 51.00
Variable overhead: 3 hours at $6.00 per hour 18.00
Total standard variable cost per unit $119.00
The company also established the following cost formulas for its selling expenses:

Fixed Cost/Month Variable Cost/Unit Sold
Advertising $330,000
Sales salaries and commissions $130,000 $15.00
Shipping expenses $4.00

The planning budget for March was based on producing and selling 24,000 units. However, during March the company actually produced and sold 30,600 units and incurred the following costs:

a. Purchased 170,000 pounds of raw materials at a cost of $9.00 per pound. All of this material was used in production.
b. Direct-laborers worked 82,000 hours at a rate of $18.00 per hour.
c. Total variable manufacturing overhead for the month was $505,000.
d. Total advertising, sales salaries and commissions, and shipping expenses were $337,000, $505,120, and $128,000, respectively.

What raw materials cost would be included in the company’s flexible budget for March?

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Answers: 2

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