ment 10- P10-166 Help Save & Highland Company produces a lightweight backpack th
ID: 2519005 • Letter: M
Question
ment 10- P10-166 Help Save & Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below Standard Quantity ondard Pri Cost Direct materials Direct labor $3.00 per yard per direct labor- Variable manufacturing overhead Total standard cost per unit $2 hour $ 2 Overhead is applied to production on the basis of direct labor-hours. During March, 570 backpacks were manufactured and sold Selected information relating to the month's production is given below: Varsabl aterials birect hanarácthirs Used $ 8,550 $1,596 $2,812 $6,384 Total standard cost allowed" Actual costs incurred Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance Variable overhead rate variance Varlable overhead efficiency variance 6,08? s57e u For the month's production Prev 1 of 1ext e to searchExplanation / Answer
1)Total standard cost for actual output = 8550+6384+1596= 16530
Standard cost per Backpack : 16530 / 5 70 = $ 29
2)Actual cost per backpack =standard cost - favorable variance
= 29- .20
= $ 28.80 per backpack
3)Standard material cost per backpack : material cost /number of units
= 8550 / 570
= 15 per backpack
Yards required per backpack = 15/3 = 5 yards per backpack.
4)material quantity variance = SR[AQ-SQ]
570 = 3 [AQ-(5*570)]
570/3 = [AQ- 2850]
190+2850 =AQ
AQ= 3040
material price variance = actual cost- [AQ*SR]
= 6080 - [3040*3]
6080 - 9120
- 3040 F
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