Evaluate the standard and actual cost sheets provided to calculate direct product costs for AHC. Allocate the overhead cost and provide a detailed variance analysis including both rate and volume variances for labor, raw materials, and factory overhead. First, calculate the standard dollar costs for the units of output. Then provide a detailed analysis using all six variances.

Required:

• Compute the standard dollar costs for the units of output.
• Compute AHC factory overhead volume variance.
• Compute a detailed analysis of AHC Labor using both rate and volume variance.
• Compute a detailed analysis of AHC Raw materials using both rate and volume variance.
• Compute a detailed analysis of AHC Factory Overhead using both rate and volume variance.

Production & Cost Description	Production & Cost Amounts
Annual Production	1500 shoulder bags 2000 wallets 1000 buckle bags
Raw materials in inches per unit (Width x Height x Depth = Volume)	1 shoulder bag = 12'' W x 15'' H x 8'' D 1 wallet = 6'' W x 10'' H x 5'' D 1 buckle bag = 13'' W x 16'' H x 10'' D
Raw materials price per unit volume	$1 per foot
Assembly labor time (hours per unit)	1 shoulder bag = 4 hours 1 wallet = 2 hours 1 buckle bag = 4 hours
Labor pay rate	$20 per hour
Assembly department overhead per direct labor hour	$10
Color dying process machine hours (MH)	1 shoulder bag = 0.5 MH 1 wallet = 0.5 MH 1 buckle bag = 0.5 MH
Painting department overhead per MH	$20
Sales price	1 shoulder bag = $210 1 wallet = $140 1 buckle bag = $210
Fixed Cost	$10,000
Variable SG&A	$3 per unit for all three types (bags, wallets, buckles)
Fixed SG&A	$25,000

Actual amount of material purchased and used	9,990,000 inches
The actual cost of material purchased and used	$832,500
The actual amount of direct labor hours	20,000
The actual cost of direct labor	$450,000
Actual production in units	Shoulder bags = 3,775 Wallets = 3,829 Buckle Bags = 2,380
Actual overhead spending	$378,773
Raw materials price per unit	$0.95. in.