Highland Company produces a lightweight backpack that is popular with college st
ID: 2447115 • 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, 720 backpacks were manufactured and sold. Selected information relating to the month’s production is given below:
1. What is the standard cost of a single backpack?
2. What is the actual cost per backpack produced during March?
3. How many yards of material are required at standard per backpack?
4. What was the direct materials price variance for March?
5. What is the standard direct labor rate per hour?
6. What is the direct labor rate variance for March? The direct labor efficiency variance?
7. What was the variable overhead rate variance for March? The variable overhead efficiency variance?
8. Prepare a standard cost card for one backpack.
Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below:
Explanation / Answer
Actual direct labor-hours
Actual labor hours /unit
Standard Cost Standard Quantity Standard Price Standard Actual Quantity Actual Price Actual Total cost or Hours or Rate Cost or Hours per unit or Rate per unit Cost per unit Direct materials =std material cost/5.10 4.00 $5.10 per yard 20.4 4.71 3.6 16.97 12218 Direct labor 1.6 11.5 18.4 1.75 12.0 21 15120 Variable manufacturing overhead 1.6 $2 per direct 3.2 1.75 2.16 3.78 2721.6 labor-hour Total standard cost 42 41.75 30,060 Actual Production March 720 units Materials Used Direct Labor Variable Total Std Cost /Unit Total Actual cost Manufacturing Overhead Total standard cost allowed* $14,688 $13,248 $2,304 Std cost per unit 20.40 $18.40 $3.20 $ 42.00 Std Labor Hrs $1.60 Actual costs incurred 12,218 15,120 2,722 30,060 Materials price variance ? Materials quantity variance $ 510 U Labor rate variance ? Labor efficiency variance ? Variable overhead rate variance ? Variable overhead efficiency variance ? aActual direct labor-hours
1,260 b Standard overhead rate per direct labor-hour $2.00 c Difference between standard and actual cost per backpack produced during March $0.25 F d Actual Back pack cost per unit 41.75 per unit e Total Actual cost for 720 units 30,060 f Direct Labor cost Actual 15,120 g Actual Direct Labor rate=f/a= 12.00 per Hour Std Material reqd for 720 unit 2880 Material qty variance 510 U Actual qty used for 720 units 3390 units Actual Material cost 12,218 Actual Material rate 3.60 Actual material qty /unit 4.71 16.97Actual labor hours /unit
1.75 Actual Mfg OH rate /hr 2.16 1 Std cost of a Backpack $ 42.00 2 Actual cost per backpack in Mar $ 41.75 3 Yards of material reqd in std backpack 4 4 Direct Material Price variane = Actual Qty Used ( Actual rate-Std rate ) =3390*0.40= 1356 F 5 Std Direct Labor rate /Hr $ 11.50 6 Direct Labor rate Variance = Actual labor Hrs (Actual rate-std rate )=1260*0.50= $ 630.00 U Direct Labor Eff var =Std rate (actual Hrs-Std Hrs)=11.5*0.15*720 $ 1,242.00 U 7 Var OH rate variance = Actual Hrs (Actual OH rate-Std OH rate)=1260*0.16 $ 201.60 U Var OH Eff Var = Std OH rate ( Actual Hrs-Std Hrs)= 2*108= $ 216.00 U 8 Standard cost card for one backpack Standard Quantity Standard Price Standard or Hours/unit or Rate/unit Cost/unit Direct materials =std material cost/5.10 4 $5.10 per yard 20.4 Direct labor 1.6 11.5 per DLH 18.4 Variable manufacturing overhead 1.6 $2 per direct 3.2 labor-hour Total standard cost 42