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
labor-hours and its standard cost card per unit is as follows:
Direct material: 5 pounds at $9.00 per pound
Direct labor: 3 hours at $14 per hour
Variable overhead: 3 hours at $9 per hour
Total standard variable cost per unit
$ 45.00
42.00
27.00
$ 114.00
The company also established the following cost formulas for its selling expenses:
Variable
Fixed Cost per Cost per
Advertising
Sales salaries and commissions
Shipping expenses
Month
Unit Sold
$ 300,000
$ 300,000
$ 22.00
$ 13.00
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 $7.20 per pound. All of this material was used in production.
b. Direct-laborers worked 65,000 hours at a rate of $15.00 per hour.
c. Total variable manufacturing overhead for the month was $612,300.
d. Total advertising, sales salaries and commissions, and shipping expenses were $303,000, $505,000, and $215,000,
respectively.
14. What is the spending variance related to sales salaries and commissions? (Indicate the effect of each variance by selecting "F" for
favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)
Spending variance related to sales salaries and commissions
