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 Price or Rato standard Cost standard Quantity or Hours Direct materials Direct labor $4.58 per yard per direct labor Variable manufacturing overhead Total standard cost per unit $2 hour Overhesd is applied to production on the basis of direct labor-hours. During March, 530 backpscks were manufactured and sold Selected information relating to the month's production is given below Variablo Materials Direct Manufacturing Labor Used 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 9,548 8,645 $5,936 $1,484 $1.69 1,575 U For the month's production. The following additional information is avsilable for March's production: Actual direct labor-hours Difference between standard and actual cost per backpack e.20 produced during March Required: Hint: It may be helpful to complete a general model disgram for direct msterials, direct labor, and variable manufacturing overhesd before attempting to answer any of the requirements. 1, what is the stenaard cost of single beckpack? 2 What was the actual cost per backpack produced during March? 3. How many yards of material are required at standard per backpack? 4What was the materials price variance for March if there were no beginning or ending inventories of materials? 5. What is the standard direct labor rate per hour? 6. What was the labor rate variance for March? The labor efficiency variance? 7. What was the variable overhead rate variance for March? The variable overhead efficiency variance? 8. Prepare a standard cost card for one backpack Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 What is the standard cost of a single backpack? (Round your answer to 2 decimal places.) Required 2

Answer 1

Solution 1:

Standard cost of 530 backpack produced = $9,540 + $5,936 + $1,484 = $16,960

Standard cost of a single back pack = $16,960 / 530 = $32 per backpack

Solution 2:

Difference between standard cost and actual cost per backpack = $0.20 F

Actual cost per backpack = $32 - $0.20 = $31.85 per backpack

Solution 3:

Standard cost of material used for actual production = $9,540

Standard price of material = $4.50 per yard

Total standard material for actual production = $9540 / $4.50 = 2120 yard

Material required as per standard per back pack = 2120 / 530 = 4 yard per backpack

Solution 4:

Material price variance = Total material variance - Material quantity variance

Total material cost variance = $9,540 - $8,645 = $895 F

Material quantity variance = $1,575 U

Material price variance = $895 F - $1,575 U = $2,470 F

Solution 5:

Standard hours allowed for actual production = $1,484 / 2 = 742 hour

Standard direct labor hour per back pack = 742 / 530 = 1.40 hours

Total standard cost of direct labor = $5,936

Standard rate of direct labor = $5,936 /742 = $8 per hour

Solution 6:

Total actual cost of backpack produced = 530 * $31.80 = $16,854

Direct labor cost incurred = $16,854 - $8,645 - $1,690 = $6,519

Actual direct labor hours = 795

actual rate of labor = $6,519 / 795 = $8.20 per hour

Direct labor rate variance = (SR - AR) * AH = ($8 - $8.20) * 795 = $159 U

Direct labor efficiency variance = (SH - AH) * SR = (742 - 795) * $8 = $424 U

Solution 7:

Actual rate of variable overhead = $1,690/795 = $2.125786 per labor hour

Variable overhead rate variance = (SR - AR) * AH = ($2 - $2.125786) * 795 = $100 U

Variable overhead efficiency variance = (SH - AH) * SR = (742 - 795) * $2 = $106 U

Solution 8:

Standard cost Card - Highland Company
Particulars	Qty		Rate		Per unit
Direct material	4	Yard at	$4.50	Per Yard	$18.00
Direct labor	1.4	DLHs at	$8.00	Per DLH	$11.20
Variable overhead	1.4	DLHs at	$2.00	Per DLH	$2.80
Standard cost per unit					$32.00