Highland Company produces a lightweight backpack that is popular with college st
ID: 2487100 • 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:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
?
$5.00 per yard
$ ?
Direct labor
?
?
?
Variable manufacturing overhead
?
$2 per direct
labor-hour
?
Total standard cost
$?
Overhead is applied to production on the basis of direct labor-hours. During March, 790 backpacks were manufactured and sold. Selected information relating to the month’s production is given below:
Materials Used
Direct Labor
Variable
Manufacturing
Overhead
Total standard cost allowed*
$15,800
$13,272
$2,528
Actual costs incurred
$13,120
?
$3,421
Materials price variance
?
Materials quantity variance
$ 600 U
Labor rate variance
?
Labor efficiency variance
?
Variable overhead rate variance
?
Variable overhead efficiency variance
?
*For the month's production.
The following additional information is available for March’s production:
Actual direct labor-hours
1,400
Standard overhead rate per direct labor-hour
$2.00
Difference between standard and actual cost per backpack produced during March
$0.10
F
Required:
1.
What is the standard cost of a single backpack?
Standard cost for March production:
Materials :
Direct labor :
Variable manufacturing overhead:
Total standard cost:
Number of backpacks produce:
Standard cost of a single backpack:
2. What was the actual cost per backpack produced during March? (Round your answers to 2 decimal places.)
Standard cost of a single backpack :
Deduct difference between standard and actual cost:
Actual cost per backpack:
3. How many yards of material are required at standard per backpack?
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:
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).)
F/None/U
Materials Price Variance
Materials quantity Variance
Spending Variance
5. What is the standard direct labor rate per hour?
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
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))
F/None/U
Labor rate Variance
Labor efficiency 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))
F/None/U
Variable overhead rate variance
Variable overhead efficiency variance
8.
Direct Materials
Yards
$5.00
Per Yard
Direct Labor
Hours
Per Hour
Variable manufacturing overhead
Hours
$2.00
Per direct Labor Hour
Total standard cost
Prepare a standard cost card for one backpack. (Round your answers to 2 decimal places.)
Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below:
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
Standard Price of material per yard = $5 per yard
Standard cost for 790 bagpacks = 15800
Material cost per bag = $20
Number of yards used per bag = 20/5 = 4 yards
Material quantity variance = 600U
material quantity variance = (Standard Qty * Standard rate) - (Actual Qty * Standard rate)
15800 - x = 600U
Hence (Actual Qty * Standard rate) = 15800 + 600 = 16400
Material Price Variance = (Actual Qty * Standard rate) - Actual Material cost
=16400 - 13120 = 3280F
Standard variable overhead per bag = 2528/790 = 3.2
Variable overhead variance = standard overhead - actual overhead = 3528-3421 = 107F
Standard overhead rate per hour = 2
Standard overhead hours for 790 bags = 2528/2 = 1264 hours
Actual hours = 1400
Variable overhead efficiency variance = (Standard hours * Standard rate) - (actual hours * Standard rate) = 2528 - (1400*2) = 272U
Variable overhead rate variance = (actual hours * Standard rate) - actual variable overheads = 2800 - 3421 = 621U
Standard cost per bag = 15800 + 13272 + 2528 = 31600/790 = 40 per bag
Actual cost per bag = 39.90 (40-0.1)
Actual Material cost per bag = 16.61
Actual Variable cost per bag = 3421/790 = 4.33
Standard labour cost per bag = 13272/790 = 16.8
16.61 + 4.33 + actual labour cost per bag = 39.90
actual Labour cost per bag = 18.96
Actual labour cost = 18.96*790 = 14980 (rounded)
Labour variance = 13272-14980 = 1708U
Standard labour hour per unit = 2528 / 2 / 790 = 1.6 hours
Standard labour cost per hour = 13272/(1.6*790) = 10.5 per hour
Labour rate variance = (Standard rate * Actual hours) - Actual labour cost
Actual Labour hours =1400
Labour rate variance = (10.5*1400) - 14980 = 280U
Labour efficiency variance = Stamndard labour - (Standard rate * Actual hours) = 13272 - 14700 = 1428U
Standard Material Yard 5 Labour Hour 10.5 Variable Overhead Hour 2