Highland Company produces a lightweight backpack that is popular with college st
ID: 2709920 • 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, 640 backpacks were manufactured and sold. Selected information relating to the month’s production is given below:
Required:
2. What was the actual cost per backpack produced during March? (Round your answers to 2 decimal places.)
3. How many yards of material are required at standard per backpack?
4. What was the materials price variance for March if there were no beginning or ending inventories of materials? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Materials Price Variance
Material Quantity Variance
Spending Variance
5. What is the standard direct labor rate per hour?
6. What was the labor rate variance for March? The labor efficiency variance? (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))
7.
What was the variable overhead rate variance for March? The variable overhead efficiency variance? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))
Standard Quantityor Hours Standard Price
or Rate Standard
Cost Direct materials ? $6.00 per yard $ ? Direct labor ? ? ? Variable manufacturing overhead ? $2 per direct
labor-hour ? Total standard cost $?
Explanation / Answer
1. What is the standard cost of a single backpack?
Total Standard Cost for 640 Back pack = Materials Used + Direct Labor + Variable
ManufacturingOverhead
Total Standard Cost for 640 Back pack = 14592+8064 + 1536
Total Standard Cost for 640 Back pack = $ 24192
Standard cost of a single backpack = Total Standard Cost for 640 Back pack /No of Backpack
Standard cost of a single backpack = 24192/640
Standard cost of a single backpack = $ 37.80
2. What was the actual cost per backpack produced during March? (Round your answers to 2 decimal places.)
Actual cost per backpack = Standard cost of a single backpack - Difference between standard and actual cost per backpack produced during March
Actual cost per backpack = 37.80-0.2
Actual cost per backpack = 37.60
3. How many yards of material are required at standard per backpack?
No of yards of material are required at standard per backpack = (Standard Material Cost of 640 Backpack/640)/Standard Price per backpack
No of yards of material are required at standard per backpack = (14592/640)/6
No of yards of material are required at standard per backpack = 3.80 yard
4. What was the materials price variance for March if there were no beginning or ending inventories of materials? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Material Quantity Variance = (Actual Quantity Used- Standard Quantity)Standard Price
660 = (Actual Quantity Used - 3.8*640)*6
Actual Quantity Used = 660/6 + 2432
Actual Quantity Used = 2542 yard
Materials Price Variance = (Actual price - Standard Price) *Actual Quantity
Materials Price Variance = (12710/2542 - 6)*2542
Materials Price Variance =$ 2542 F
Material Quantity Variance = $ 660 U ( Given)
Spending Variance = Actual Cost - Standard cost allowed
Spending Variance = (12710-14592)
Spending Variance = $ 1882 F
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