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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:
The planning budget for March was based on producing and selling 29,000 units. However, during March the company actually produced and sold 34,000 units and incurred the following costs:
a.
Purchased 160,000 pounds of raw materials at a cost of $8.50 per pound. All of this material was used in production.
b.
Direct laborers worked 59,000 hours at a rate of $14 per hour.
c. Total variable manufacturing overhead for the month was $564,040.
2.
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 995 hours each month to produce 1,990 sets of covers. The standard costs associated with this level of production are:
3.
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:
During November, the following activity was recorded relative to production of Fludex:
a. Materials purchased, 10,500 ounces at a cost of $143,325.
b.
There was no beginning inventory of materials; however, at the end of the month, 3,050 ounces of material remained in ending inventory.
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