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:
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|
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Direct material: 5 pounds at $10 per pound |
$ |
50 |
Direct labor: 2 hours at $15 per hour |
|
30 |
Variable overhead: 2 hours at $5 per hour |
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10 |
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|
|
Total standard variable cost per unit |
$ |
90 |
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The company also established the following cost formulas for its selling expenses:
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Fixed Cost per Month |
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Variable Cost per Unit Sold |
Advertising |
$ |
400,000 |
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|
|
|
Sales salaries and commissions |
$ |
300,000 |
|
$ |
13.00 |
|
Shipping expenses |
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|
|
$ |
3.00 |
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The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,600 units and incurred the following costs: |
a. |
Purchased 200,000 pounds of raw materials at a cost of $9.4 per pound. All of this material was used in production. |
b. |
Direct-laborers worked 75,000 hours at a rate of $16 per hour. |
c. |
Total variable manufacturing overhead for the month was $558,900. |
d. |
Total advertising, sales salaries and commissions, and shipping expenses were $416,000, $780,000, and $135,000, respectively. |
Required: |
What is the spending variance related to sales salaries and commissions? (Input the amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
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