Problem 10-16 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]
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||?||$||6.00||per yard||$||?|
|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, 760 backpacks were manufactured and sold. Selected information relating to the month’s production is given below:
|Total standard cost allowed*||$||18,240||$||15,808||$||2,432|
|Actual costs incurred||$||17,125||?||$||4,345|
|Materials price variance||?|
|Materials quantity variance||$||2,310||U|
|Labor rate variance||?|
|Labor efficiency variance||?|
|Variable overhead rate variance||?|
|Variable overhead efficiency variance||?|
*For the month's production.
The following additional information is available for March’s production:
|Actual direct labor-hours||1,140|
|Difference between standard and actual cost per backpack produced during March||$||0.10||F|
Hint: It may be helpful to complete a general model diagram for direct materials, direct labor, and variable manufacturing overhead before attempting to answer any of the requirements.
1. What is the standard cost of a single backpack?
2. What was the actual cost per backpack produced during March?
3. How many yards of material are required at standard per backpack?
4. What was the materials price variance for March if there were no beginning or ending inventories of materials?
5. What is the standard direct labor rate per hour?
6. What was the labor rate variance for March? The labor efficiency variance?
7. What was the variable overhead rate variance for March? The variable overhead efficiency variance?
8. Prepare a standard cost card for one backpack.
|Standard Quantity||Standard Price||Standard|
|or Hours||or Rate||Cost|
|Direct materials||4.00||$||6||per yard||$||24||(4*6)|
|Variable manufacturing overhead||1.6||$||2||per direct labor-hour||3.2||(1.6*2)|
|Total standard cost per unit||$||48|
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