Che Highland Company produces a lightweight backpack that is popular with colleg
ID: 2516413 • Letter: C
Question
Che Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below Direct materials Direct labor $3.e0 per yard S ? Variable manufacturing overhead Total standard cost per unit per direct labor- 2 hour s ? 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 Variable Direct Manufacturing Labor $6,384 Materials Used 5 8,550 S 6,080 head $1,596 2,812 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 S 570 U For the month's production.Explanation / Answer
1.
Standard cost for March Production
Material
$ 8,550
Add: Direct labor
$ 6,384
Add: Variable manufacturing overhead
$ 1,596
Total standard cost
$ 16,530
÷Number of backpack produced
570
Standard cost of a single backpack
$ 29
2.
Standard cost of a single back pack
$ 29.00
Less: difference between standard cost and actual cost
$ 0.20
Actual cost per back pack
$ 28.80
3.
Total standard cost of material allowed during March
$ 6,080
÷No. of back packs produced during March
570
Standard material cost per backpack
$ 10.67
÷Standard material cost per yard
$ 3
No. of yard per back pack
3.56
4.
Standard cost of material used
$8,550
Less: Actual cost of material used
$6,080
Material price variance
$2,470
F
****Answered first four questions.
Standard cost for March Production
Material
$ 8,550
Add: Direct labor
$ 6,384
Add: Variable manufacturing overhead
$ 1,596
Total standard cost
$ 16,530
÷Number of backpack produced
570
Standard cost of a single backpack
$ 29