The planning budget for march was based on producing and

Reference no: EM13572673

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 per pound	$	50
Direct labor: 2 hours at $15 per hour		30
Variable overhead: 2 hours at $5 per hour		10

Total standard variable cost per unit	$	90

The company also established the following cost formulas for its selling expenses:

	Fixed Cost per Month		Variable Cost per Unit Sold
Advertising	$	400,000
Sales salaries and commissions	$	300,000	$	13.00
Shipping expenses			$	3.00

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.).)

Reference no: EM13572673

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