4 Problem 10-16 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Highlan
ID: 2554382 • Letter: 4
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4 Problem 10-16 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below 10 points Standard Quantity or Hours Standard Price or Rate Standard Cost $8.00 per yard Direct materials Direct labor eBook per direct labor- $ 2 hour Variable manufacturing overhead Total standard cost per unit Print Overhead is applied to production on the basis of direct labor-hours. During March, 600 backpacks were manufactured and sold. Selected information relating to the month's production is given below Reterences Variable Materials Used s 15,360 s 13,965 Direct Manufacturing Labor $9,000 Overhead $1,800 $2,985 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 s 600 U For the month's production. The following additional information is available for March's production: Actual direct labor-hours Difference between standard and actual cost per backpack 900 produced during larch s 0.20 F Hint It may be heipful to complete a general model diagram for direct materials, direct labor, and variable overhead before attempting to answer any of the requirements 1 What is the standard cost of a single backpack? 2. What was the actual cost per backpack produced during March? 3 How many yards of material are required at standard per backpack 4 What was the materials price e varance for March d there were no beginning or ending inventonies of materials? 5 What is the standard direct labor rate per hour? 6. What was the labor rate variance for March? The labor efficiency vanance? 7 What was the vanable overhead rate variance for March? The vaiable overhead efficiency variance? 8 Prepare a standard cost card for one backpack Complete this question by entering yourExplanation / Answer
Standard Variable costs relating to a single backpack
Standard Quantity or Hours
Standard Price or Rate
Standard Cost
Direct Materials
3.2
$8 per yard
25.6
Direct Labor
1.5
$10 per hour
15
Variable manufacturing Overhead
1.5
$2 per hour
3
Total Variable Costs
43.6
Standard Yards Required for the backpacks
= Standard Cost / $ 8
= 15360 / 8
1920
yards
3. Standard Yards Required per bagpack
= 1920 / 600
3.2
yards
Standard Labor Hour Required
= Standard Variable Overhead / $2
= 1800 / 2
900
hours
Standard labor rate
= Standard Direct Labor cost / 900
= 9000 / 900
10
per hour
Standard Labor Hour Required per backpack
= 900 / 600
1.5
hour
Material Quantity Variance
= Standard Price ( Actual Quantity - Standard Quantity)
600
= 8 (Actual Quantity - 1920)
75
= Actual Quantity - 1920
Actual Quantity of Direct Material Used
1995
yards
Actual Price per yard
= Actual Material Cost / 1995
= 13965 / 1995
7
per yard
2.
Actual Direct Labor Hours
900
hours
Difference between Standard and Actual Cost per back pack
0.2
F
Total Standard Cost
= 15360 + 9000 + 1800
$ 26,160
Total Actual Costs
= 13965 + Direct Labor Cost + 2985
= 16950 + Direct labor cost
Difference between Standard and Actual Cost per back pack
= [26160 - (16950 + Direct Labor Cost)] / 600
0.2
= (9210 - Direct Labor Cost) / 600
120
= 9210 - Direct Labor Cost
Direct Labor Cost
= 9210 - 120
Direct Labor Cost
$ 9,090
Total Actual Cost
= 16950 + Direct labor cost
= 16950 + 9090
$ 26,040
Total Actual Cost per bagpack
= 26040 / 600
$ 43
4.
Material Price Variance
= Actual Quantity ( Actual Rate - Standard Rate)
= 1995 ( 7 - 8 )
1995
F
Materials Used
Direct Labor
Variable Manufacturing Overhead
Total Standard cost Allowed
15360
9000
1800
Actual costs Incurred
13965
9090
2985
Material Quantity Variance
600
U
Material Price Variance
1995
F
Actual Variable Overhead Rate
= Actual Variable Over Head / Actual Direct Labor
= 2985 / 900
3.32
per direct labor hour
Standard Variable costs relating to a single backpack
Standard Quantity or Hours
Standard Price or Rate
Standard Cost
Direct Materials
3.2
$8 per yard
25.6
Direct Labor
1.5
$10 per hour
15
Variable manufacturing Overhead
1.5
$2 per hour
3
Total Variable Costs
43.6
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