Transcribed Image Text: Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours and its standard cost card per unit is as follows:

Transcribed Image Text: Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours
and its standard cost card per unit is as follows:
Direct material: 6 pounds at $8 per pound
Direct labour: 4 hours at $13 per hour
Variable overhead: 4 hours at $5 per hour
$ 48
52
20
Total standard variable cost per unit
$120
Fixed overhead was budgeted at $621,000. Fixed overhead is applied on the basis of direct labour-hours. The company also
established the following cost formulas for its selling expenses:
Fixed Cost
per Month
$380,000
$280,000
Variable Cost per
Unit Sold
Advertising
Sales salaries and commissions
Shipping expenses
$11.00
$ 5.00
The static (i.e., planning) budget for March was based on producing and selling 20,000 units. However, during March the company
actually produced and sold 25,500 units and incurred the following costs:
$7.2 per pound. All of this material was used in production.
a. Purchased 170,000 pounds of raw materials at a cost
b. Direct-labourers worked 73,000 hours at a rate of $14 per hour.
c. Total variable manufacturing overhead for the month was $427,000. And fixed manufacturing overhead was $616,000.
d. Total advertising, sales salaries and commissions, and shipping expenses were $389,000, $550,000, and $133,000, respectively.
Required:
direct labour cost would be included in the company’s flexible budget for March?
Direct labour cost

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