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3. DETERMINING UNIT COSTS, VARIANCE ANALYSIS, AND INTERPRETATION (10 points) Good Boy Dog, Inc. produces its product (dog food) in 500-bag batches. Assume the standard
3. DETERMINING UNIT COSTS, VARIANCE ANALYSIS, AND INTERPRETATION (10 points) Good Boy Dog, Inc. produces its product (dog food) in 500-bag batches. Assume the standard batch consists of 10,000 pounds of direct materials at $0.25 per pound, 16 direct labor hours at $15 per hour, and variable overhead cost (based on machine hours) at the rate of $20 per hour with 10 machine hours per batch. The following variable costs were incurred for the last 500- bag batch produced: Direct materials: 10,250 pounds costing $2,255 were purchased and used Direct labor 15 hours costing $231 Variable overhead: $215 Machine hours used: 9.5 hours a. Determine the actual and standard variable costs per bag of dog food produced, separated into direct materials, direct labor, and variable overhead. b. For the last 500-bag batch, determine the standard cost variances for direct materials, direct labor, and variable overhead. You should determine the materials price and quantity variances, the labor rate and efficiency variances, and the variable overhead spending and efficiency variances.) c. Explain the possible causes for each of the variances determined in requirement (b)
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