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Accounting

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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 materials: 5 pounds at $8 per pound $ 40
Direct labor: 3 hours at $15 per hour 45
Variable overhead: 3 hours at $9 per hour 27
Total standard cost per unit $ 112

The planning budget for March was based on producing and selling 21,000 units. However, during March the company actually produced and sold 26,000 units and incurred the following costs:

  1. Purchased 160,000 pounds of raw materials at a cost of $6.50 per pound. All of this material was used in production.
  2. Direct laborers worked 70,000 hours at a rate of $16 per hour.
  3. Total variable manufacturing overhead for the month was $655,200.

2. What raw materials cost would be included in the companys flexible budget for March?

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