Determining Unit Costs, Variance Analysis, and Interpretation Big Dog Company, a
ID: 2466650 • Letter: D
Question
Determining Unit Costs, Variance Analysis, and Interpretation Big Dog Company, a manufacturer of dog food, produces its product in 1,000-bag batches. The standard cost of each batch consists of 8,000 pounds of direct materials at $0.40 per pound, 48 direct labor hours at $8.75 per hour, and variable overhead cost (based on machine hours) at the rate of $10 per hour with 16 machine hours per batch. The following variable costs were incurred for the last 1,000-bag batch produced: Direct materials 8,300 pounds costing $ 3,154 were purchased and used Direct labor 45 hours costing $ 450 Variable overhead $ 225 Machine hours used 18 hours (a) Determine the actual and standard variable costs per bag of dog food produced, separated into direct materials, direct labor, and variable overhead. Round your answers to 3 decimal places. Actual Cost Standard Cost Direct materials $Answer 2,378 $Answer 2,400 Direct labor Answer 450 Answer 408 Variable overhead Answer 225 Answer 160 Total variable costs per bag $Answer 3.053 $Answer 2.968 (b) For the last 1,000-bag batch, determine the standard cost variances for direct materials, direct labor, and variable overhead. Round your answers two decimal places. Materials price variance $Answer 22 Answer Materials quantity variance $Answer 42 Answer Labor rate variance $Answer 65 Answer Labor efficiency variance $Answer 8.5 Answer Variable overhead spending variance $Answer 16 Answer Variable overhead efficiency variance $Answer 16 Answer
Explanation / Answer
Solution:
(a)
Calculation of Standard Cost per Bag
Standard Cost Per Batch (1 Batch = 1,000 bags)
Quantity per batch
Cost per unit
Cost Per Batch
Cost Per Bag
Direct Material
8,000
$0.40
$3,200
3.20
Direct Labor
48
$8.75
$420
0.42
Variable Overhead Cost
16
$10
$160
0.16
Total Variable Cost
$3,780
$3.78
Calculation of Actual Cost per bag
Actual Cost Per Batch (1 Batch = 1,000 bags)
Quantity per batch
Cost per unit
Cost Per Batch
Cost Per Bag
Direct Material
8,300
$0.38
$3,154
$3.15
Direct Labor
45
$10.00
$450
$0.45
Variable Overhead Cost
18
$12.50
$225
$0.23
Total Variable Cost
$3,829
$3.829
For (b) part please ask separate question as this involves lot of calculation..
Standard Cost Per Batch (1 Batch = 1,000 bags)
Quantity per batch
Cost per unit
Cost Per Batch
Cost Per Bag
Direct Material
8,000
$0.40
$3,200
3.20
Direct Labor
48
$8.75
$420
0.42
Variable Overhead Cost
16
$10
$160
0.16
Total Variable Cost
$3,780
$3.78
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