Question

Please show all work to get to answer.

Determining Unit Costs, Variance Analysis, and Interpretation Big Dog Company, a manufacturer of dog food, produces its product in 1,000-bag batches. The standard cost of each batch consists of 6,000 pounds of direct materials at $0.30 per pound, 48 direct labor hours at $8.50 per hour, and variable overhead cost (based on machine hours) at the rate of $10 per hour with 18 machine hours per batch. The following variable costs were incurred for the last 1,000-bag batch produced: Direct materials 6,300 pounds costing $1,778 were purchased and used Direct labor 45 hours costing $450 Variable overhead $250 Machine hours used 20 hours (a) Determine the actual and standard variable costs per bag of dog food produced, separated into direct materials, direct labor, and variable overhead. Round your answers to three decimal places. Actual Cost Standard Cost Direct materials Direct labor Variable overhead Total variable costs per bag $ 2.478 $ 2.388 (b) For the last 1,000-bag batch, determine the standard cost variances for direct materials, direct labor, and variable overhead. Round your answers two decimal places. Materials price variance $ XU Materials quantity variance $ 90 U Labor rate variance 67.5 U Labor efficiency variance 25.5 F . Variable overhead spending variance $ 50U Variable overhead efficiency variance $ 20U

Answer 1

Answer a

	Actual	Standard
Material	$ 1.778	$ 1.800
Labor	$ 0.450	$ 0.408
Overhead	$ 0.250	$ 0.180
Total variable cost	$ 2.478	$ 2.388

Calculations:

	Actual	Standard
Material	=1778/1000	=(6000*0.3)/1000
Labor	=450/1000	=(48*8.5)/1000
Overhead	=250/1000	=(10*18)/1000

Answer b

Material Price Variance = $ 112 (F)

Calculations:

Given in question

Standard Price per pound	$            0.30
Standard quantity	6,000.00
Actual price per pound	$            0.28
Actual Quantity	6,300.00

Now,

Material Price Variance = (Standard Price per pound-Actual price per pound)*Actual Quantity

Material Price Variance = ($ 0.3-$ 0.282222222)*6300

Material Price Variance = $ 112 (F)

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