Question
Determining Unit Costs, Variance Analysis, and Interpretation Nestl, manufacturer of Purina Dog Chow, produces its product in 500-bag batches. Assume the standard batch consists of
Determining Unit Costs, Variance Analysis, and Interpretation Nestl, manufacturer of Purina Dog Chow, produces its product 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.
Round your answers to three decimal places.
Actual Cost | Standard Cost | |
Direct materials | Answer | Answer |
Direct labor | Answer | Answer |
Variable overhead | Answer | Answer |
Total variable costs per bag | Answer | Answer |
(b) For the last 500-bag batch, determine the standard cost variances for direct materials, direct labor, and variable overhead.
Round your answers two decimal places.
Materials price variance | Answer | AnswerFU |
Materials quantity variance | Answer | AnswerFU |
Labor rate variance | Answer | AnswerFU |
Labor efficiency variance | Answer | AnswerFU |
Variable overhead spending variance | Answer | AnswerFU |
Variable overhead efficiency variance | Answer | AnswerFU |
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