Highland Company produces a lightweight backpack that is popular with college st
ID: 2390516 • 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:
$?
Overhead is applied to production on the basis of direct labor-hours. During March, 525 backpacks were manufactured and sold. Selected information relating to the month's production is given below:
a)What is the standard cost of a single backpack? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Standard cost for March Production:
Materials ___________
Direct Labor __________
Variable manuf overhead ___________
Total standard cost
Number of backpacks produced __________
Standard cost of a single backpack __________
b)What was the actual cost per backpack produced during March? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Standard cost of a single backpack _________
Deduct difference between standard and actual cost _________
Actual cost per backpack _________
c)How many yards of material are required at standard per backpack? (Round your answer to 2 decimal places.)
Total standard cost of materials allowed during March _________
Number of backpacks produced during March _________
Standard materials cost per backpack _________
Standard materials cost per yard _________
Number of yards per backpack _________
d)What was the direct materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)
Materials price variance __________ ___________
Materials quantity variance __________ __________
Spending bariance _________ __________
What is the standard direct labor rate per hour? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Standard variable manufacturing overhead cost for March ___________
Standard variable manufacturing overhead rate per direct labor-hour ___________
Standard direct labor-hours for March __________
Standard direct labor cost for March __________
Standard direct labor rate per hour ___________
What was the direct labor rate variance for March? The direct labor efficiency variance? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)
What was the variable overhead rate variance for March? The variable overhead efficiency variance?(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)
Prepare a standard cost card for one backpack. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
$_________
Standard Quantity or Hours Standard Priceor Rate Standard
Cost Direct materials ? $4.5 per yard $? Direct labor ? ? ? Variable manufacturing overhead ? $2 per direct labor-hour ? Total standard cost
$?
Explanation / Answer
(1a) Standard cost of Single Backpack :-
Material (9450/525)
18
Labour (5880/525)
11.2
Variable O/H (1470/525)
2.8
Standard cost of Single Backpack
32
(1b) Actual cost of Single Backpack :-
Difference between standard and actual cost per backpack produced during March = 0.20 (F)
Actual cost of Single Backpack = 32 – 0.20 = 31.80
(1c) Yards of material are required at standard per backpack :-
Total standard cost of materials allowed during March
9450
Number of backpacks produced during March
525
Standard materials cost per backpack
(9450/4.5)
=2100
Standard materials cost per yard
4.5
Number of yards per backpack
(2100/525)
=4
(1d) DM Variances:-
DM Price Variance
2200 (F)
DM Quantity Variance
450 (U)
DM Spending variance
1750 (F)
Direct Material Spending Variance :-
= Std cost – Actual cost
= 9450 – 7700= 1750(F)
Material Qty Variance = 450(U)
Material Cost Variance = Material Price Variance + Material Qty Variance
1750(F) = MPV + 450(U)
MPV = 2200 (F)
(2)
Standard variable manufacturing overhead cost for March (A)
1470
Standard variable manufacturing overhead rate per direct labor-hour (B)
2
Standard direct labor-hours for March (C=A/B)
735 hrs
Standard direct labor cost for March (D)
5880
Standard direct labor rate per hour (D/C)
$ 8 per hour
(3)
Direct Labour Rate Variance
144(U)
Direct Labour Efficiency Variance
1320(U)
Labour Rate Variance :-
(Std Rate – Actual Rate) * Actual hrs
Actual Total cost per Back Pack = 31.80
Actual total cost of 525 Back pack – 525*31.80= 16695
Actual Labour cost = Actual total cost – Actual Material cost – Actual variable cost
= 16695 – 7700– 1650= 7345
Actual Rate per hr = 7345/900 hrs = 8.16
=( Std Rate – Actual Rate) * Actual hrs
=(8 – 8.16) * 900= 144(U)
Labour Efficiency Variance:-
(Std hrs – Actual hrs) * SR
(735 – 900) * 8 = 1320(U)
Actual cost of Single Backpack :-
Difference between standard and actual cost per backpack produced during March = 0.20 (F)
Actual cost of Single Backpack = 32 – 0.20 = 31.80
(4)
V. O/H Rate Variance
150(F)
V. O/H Efficiency Variance
330(U)
Variable O/H Rate Variance :-
(Std Rate – Actual Rate) * Actual hrs
Std Rate = 2 per hr
Actual rate = 1650 / 900 hrs = 1.83
=(2 – 1.83) * 900 = 150(F)
V. O/H Efficiency Variance:-
(Std hrs – Actual hrs) * SR
(735 – 900) * 2= 330(U)
(5) Std Cost card:-
Standard Quantity or
Hours
Standard Price or Rate
Standard Cost
Direct materials
4 yards
4.5 per yard
$ 18
Direct labor
1.4 hours
$8per hour
$ 11.2
Variable manufacturing overhead
1.4 hours
2.0 per hour
$ 2.8
Total standard cost
$ 32
Material (9450/525)
18
Labour (5880/525)
11.2
Variable O/H (1470/525)
2.8
Standard cost of Single Backpack
32
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