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 Standard Price Standard or Hours or Rate Cost Direct materials $4.00 per yard Direct labor Variable manufacturing overhead $ 2 per direct labor-hour Total standard cost per unit Overhead is applied to production on the basis of direct labor-hours. During March, 490 backpacks were manufactured and sold. Selected information relating to the month's production is given below.

Answer 1

1)	Standard cost for September production
	Materials				8,820
	Direct labor				5,586
	Variable manufacturing overhead				1,176
	total standard cost		(a)		15,582
	number of backpacks produced			(b)	490
	standard cost of single backpack a/b				31.8	answer
2)	Standard cost of a single backpack(above)				31.8
	Deduct Fav variance between std and actual cost				-0.2
	Actual cost per backpack				31.6
3)	total standard cost of materials used (a)				8,820
	number of backpacks produced			(b)	490
	standard material cost per backpacka/b				18
	standard material cost per backpack/standard material cost per yard
	18/4	=	$4.5	yards per backpack
4)	standard cost of material used				8,820
	actual cost of materials used				7,350
	Total variance				1,470	F
	price variance				2,450	F
	Quantity variance				980	U	(given)
	total variance				1,470	F
5)	Std VMOH cost				1,176
	std VMOH rate per direct labor hr				2		(given)
	Standard direct labor hours				588
	total std direct labor cost /total standard DLH's
	5,586	/	588	=	9.5	per DLH	answer
6)	Actual cost per backpack produced				31.6
	number of backpacks produced				490
	total actual cost of production					15484
	less:Actual cost of materials					-7,350
	Actual cost of variable mfg overhead					-1,078
	actual cost of direct labor					7056
	direct labor rate variance
	(AH*AR - SR*AH)
	7056 - 735*9.5
	73.5	U
	Direct labor efficiency variance
	(AH-SH)*SR
	(735-588)*9.5
	1396.5	U
7)	variable overhead rate variance
	(AH*AR - SR*AH)
	1,078	-	735*2
	392	F
	variable overhead efficiency variance
	(AH-SH)*SR
	(735-588)*2
	294	U
			SQ or	SP/SR	standard
8)			SH		cost
	Direct materials		$4.5	4	18
	Direct labor		1.2	9.5	11.4
	VMOH		1.2	2	2.4
	total standard cost per backpack				31.8