Highland Company produces a lightweight backpack that is popular with college st
ID: 2513551 • 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 Quantit andard Price or Rate Cost $5.00 per yard Direct materials Direct labor per direct labor- Variable manufacturing overhead Total standard cost per unit $ 2 hour Overhead is applied to production on the basis of direct labor-hours. During March, 780 backpacks were manufactured and sold Selected information relating to the month's production is given below Varlable Materialts Manufacturing Used Direct Labor Overhead $2,496 $5,491 $13,104 s 15,600 s 13,112 Total standard cost allowed Actual costs incurred Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance Variable overhead rate variance Variable overhead efficiency variance $ 790 u For the month's production.Explanation / Answer
1.
Standard cost for March Production
Material
$15,600
Add: Direct labor
$13,104
Add: Variable manufacturing overhead
$2,496
Total standard cost
$31,200
÷Number of backpack produced
780
Standard cost of a single backpack
$40
2.
Standard cost of a single back pack
$40.00
Less: difference between standard cost and actual cost
$ 0.10
Actual cost per back pack
$39.90
3.
Total standard cost of material allowed during March
$15,600
No. of back packs produced during March
780
Standard material cost per backpack
$20
Standard material cost per yard
$5
No. of yard per back pack
4
4.
Direct material price variance = (Actual price – Standard price) x Actual quantity
= Actual price x Actual quantity - Standard price x Actual quantity
= $ 13,112 - $ 15,600 = - $ 2,488 F
****Answered first four questions.
Standard cost for March Production
Material
$15,600
Add: Direct labor
$13,104
Add: Variable manufacturing overhead
$2,496
Total standard cost
$31,200
÷Number of backpack produced
780
Standard cost of a single backpack
$40