Question

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 $ 3.00What raw materials cost would be included in the company’s planning budget for March?

Answer 1

Answer:

Total direct material cost= $400,000

Explanation:

Giving the following information:

Direct material: 5 pounds at $8.00 per pound $ 40.00

Total direct material cost= cost per unit* total units.

Suppouse that the production for the period is 10,000 units:

Total direct material cost= (5*8)*10,000= $400,000