What is the spending variance related to advertising input

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Reference no: EM13588289

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 $8.00 per pound	$	40.00
Direct labor: 2 hours at $14 per hour		28.00
Variable overhead: 2 hours at $5 per hour		10.00

Total standard variable cost per unit	$	78.00

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

	Fixed Cost per Month		Variable Cost per Unit Sold
Advertising	$	200,000
Sales salaries and commissions	$	100,000	$	12.00
Shipping expenses			$	3.00

The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs:

a.	Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
b.	Direct-laborers worked 55,000 hours at a rate of $15.00 per hour.
c.	Total variable manufacturing overhead for the month was $280,500.
d.	Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000, respectively.

Required:

What is the spending variance related to advertising? (Input the amount as a positive value. 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.).)

Spending variance $

Reference no: EM13588289

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