Highland Company produces a lightweight backpack that is popular with college st
ID: 2571873 • Letter: H
Question
Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below:
Overhead is applied to production on the basis of direct labor-hours. During March, 1,200 backpacks were manufactured and sold. Selected information relating to the month's production is given below:
The following additional information is available for March's production:
Actual Direct Labor Hours
1,500
Difference between standard and actual cost per backpack produced during March
$0.15 F
What is the standard cost of a single backpack?
What is the actual cost per backpack produced during March?
How many yards of material are required at standard per backpack?
What was the materials price variance for March if there were no beginning or ending inventories of materials?
What is the standard direct labor rate per hour?
What was the labor rate variance for March? The labor efficiency variance?
What was the variable overhead rate variance for March? The variable overhead efficiency variance?
Prepare a standard cost card for one backpack.
Standard quantity or hours standard price or rate standard cost direct materials ? $6 per yard $? direct labor ? ? ? variable manufacturing overhead ? $3 per DLH ? total standard cost - - $?Explanation / Answer
1.
Standard cost for March production:
Material=16,800
Direct labour=$10,500
Variable manufacturing overhead=$4,200
Total std. Cost=$31,500
Number of backpack produced=1200
Standard cost of single backpack=$31,500/1200
=$26.25 per backpack
2.
Actual cost per backpack=std. Cost of single backpack - favourable variance between std. Cost and actual cost
=$26.25 - .15
=$26.10
3.
Std material cost per backpack= total standard cost of material used during march/number of backpack produced during march
=$16,800/1200
=$14 per backpack
Yards of material required at standard per backpack=$14/$6
=2.33 yards per backpack
4.
Total variance=standard cost of material used-actual cost of material used
=$16800-$15000
=$1,800 F
As there is no beginning or ending raw material inventory, the all material purchased were used in production during the month , therefore :
Total variance=price variance+quantity variance
$1800 F = price variance - 1200 U
Price variance=$3000 F
5.
Standard direct labour hours for March=standard variable manufacturing overhead cost for March/ standard variable manufacturing overhead rate per direct labour hours
=$4200/$3
= 1400 direct labour hours
Standard direct labour rate per hour=total standard direct labour cost/total standard direct labour hours
=$10,500/1400
=$7.50 per direct labour hour
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