Highland Company produces a lightweight backpack that is popular with college st
ID: 2581322 • 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 QuantityStandard Price Standard or Hours Direct materials Direct labor or Rate 6 per yard $7 $3 per direct labor-hour Total standard cost Overhead is applied to production on the basis of direct labor-hours. During March, 1,000 backpacks were manufactured and sold. Selected information relating to the month's production is given below Vaiable Materials Used Direct Labor Overhead $16,800 $15,000 Total standard cost allowed" Actual costs incurred Materials price variance Materials quantity variance Labor rate variance Labor efficlency variance Variable overhead rate variance Variable overhead efficiency variance $10,500 $4,200 $3,600 1,200 U "For the month's production The following additional information is available for March's production Actual direct labor-hours Standard overhead rate per direct labor-hour Difflerence between standard and actual cost per backpack produced during March $0.15 F 500 $3.00 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 produced Standard cost of a single backpack 2. What was the actual cost per backpack produced during March? (Round your answers to 2 decimal places.)Explanation / Answer
Standard Actual SQ / SH SR Total AQ / AH AR Total Direct Material 2,800.00 6.00 16,800.00 3,000.00 5.00 15,000.00 $16,800 / $6 $15,000 / 3,000 Yards Direct Labor 1,400.00 7.50 10,500.00 1,500.00 8.50 12,750.00 $10,500 / 1,400 hrs $12,750 / 1,500 hrs Variable MOH 1,400.00 3.00 4,200.00 1,500.00 2.40 3,600.00 $4,200 / $3 $3,600 / 1,500 Hrs Total 31,500.00 31,350.00 Difference between Standard & actual cost per backpack = $0.15 (F) No. of backpack produced = 1,000 Standard Cost - Actual Cost = $0.15 Standard Cost per Bag = $31,500 / 1,000 Nos = $31.50 $31.50 - Actual Cost = $0.15 Actual Cost per Backpack = $31.50 - $0.15 = $31.35 Total Actual Cost = $31.35 X 1,000 Nos = $31,350 Actual Direct Labor Cost = $31,350 - ($15,000 + $3,600) Actual Direct Labor Cost = $12,750 Material Quantity Variance = (SQ - AQ) X SR = $1,200 (U) (2,800 - AQ) X $6 = (-)$1,200 AQ = 3,000 Yards Answer 1. Standard Cost of Single Backpack: Material 16,800.00 Direct Labor 10,500.00 Variable MOH 4,200.00 Total Standard Cost 31,500.00 No. of Backpack Produced 1,000 Standard Cost of Single Backpack 31.50 Answer 2. Actual Cost of Single Backpack: Material 15,000.00 Direct Labor 12,750.00 Variable MOH 3,600.00 Total Standard Cost 31,350.00 No. of Backpack Produced 1,000 Actual Cost of Single Backpack 31.35 Answer 6. Labor Rate Variance = (SR - AR) X AH Labor Rate Variance = ($7.50 - $8.50) X 1,500 Hrs Labor Rate Variance = $1,500 (U) Labor Efficiency Variance = (SH - AH) X SR Labor Efficiency Variance = (1,400 hrs - 1,500 hrs) X $7.50 Labor Efficiency Variance = $750 (U) Answer 7. Variable Overhead Rate Variance = (SR - AR) X AH Variable Overhead Rate Variance = ($3 - $2.40) X $1,500 Hrs Variable Overhead Rate Variance = $900 (F) Variable Overhead Efficiency Variance = (SH - AH) X SR Variable Overhead Efficiency Variance = (1,400 hrs - 1,500 hrs) X $3 Variable Overhead Efficiency Variance = $300 (U) Answer 8. Standard Cost Card for One Backpack: Standard Quantity or hours Standard Price of Rate Standard Cost Direct Material 2.80 Yards $6 per Yard 16.80 Direct Labor 1.40 hrs $7.50 per hr 10.50 Variable MOH 1.40 hrs $3 per DLH 4.20 Total Standard Cost 31.50