Transcribed Image Text: 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 $11.00 per pound
Direct labor: 3 hours at $12 per hour
Variable overhead: 3 hours at $7 per hour
$ 55.00
36.00
21.00
Total standard variable cost per unit
$112.00
The company also established the following cost formulas for its selling expenses:
Fixed Cost
Variable Cost
per Month
$ 280,000
$ 260,000
per Unit Sold
Advertising
Sales salaries and commissions
$ 20.00
$ 11.00
Shipping expenses
The planning budget for March was based on producing and selling 21,000 units. However, during March the company
actually produced and sold 26,600 units and incurred the following costs:
a. Purchased 154,000 pounds of raw materials at a cost of $9.50 per pound. All of this material was used in production.
b. Direct-laborers worked 63,000 hours at a rate of $13.00 per hour.
c. Total variable manufacturing overhead for the month was $510,930.
d. Total advertising, sales salaries and commissions, and shipping expenses were $286,000, $495,000, and $195,000,
respectively.
10. What is the variable overhead 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.). Input the amount as a positive value.)
Variable overhead efficiency variance
