Highland Company produces a lightweight backpack that is popular with college st

Question

Highland Company produces a lightweight backpack that is popular with college students. Standard variable c relating to a single backpack are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost S ? Direct materials Direct labor $4.00 per yard r direct $ 2 labor-hour Variable manufacturing overhead Total standard cost per unit Overhead is applied to production on the basis of direct labor-hours. During March, 420 backpacks were manufactured and sold. Selected information relating to the month's production is given below: Variable Materials Used 6,720 5,355 Direct Manufacturing Labor $4,368 Overhead $1,092 $1,407 Total standard cost allowed* Actual costs incurred Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance Variable overhead rate variance Variable overhead efficiency variance $ 420 U For the month's production.

Explanation / Answer

Since, there are multiple parts to the question, I have answered the first four.

_____

Requirement 1:

The standard cost of a single backpack is calculated as below:

_____

Requirement 2:

The actual cost per backpack is determined as follows:

_____

Requirement 3:

The value of yards of material is arrived as below:

_____

Requirement 4:

The material price variance is calculated as below:

Direct Material Price Variance = Direct Material Spending Variance - Direct Material Quantity Variance

Substituting values in the above formula, we get,

Direct Material Price Variance = (6,720 - 5,355) - (-420) = $1,785 (F)

Direct Materials 6,720 Direct Labor 4,368 Variable Manufacturing Overhead 1,092 Total Standard Cost 12,180 Standard Cost of a Single Back (12,180/420) $29

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