Highland Company produces a lightweight backpack that is popular with college students.

Standard variable costs relating to a single backpack are given below:

Overhead is applied to production on the basis of direct labor-hours. During March, 1,000

backpacks were manufactured and sold. Selected information relating to the months production is

given below:

Standard Quantity

or Hours

Standard Price

or Rate

Standard

Cost

Direct materials

........................

3.0 pounds

$5.00 per pound

$

15.00

Direct labor

...........................

0.8 hours

$16.00 per hour

12.80

Variable manufacturing overhead

........

0.4 hours*

$3.00 per hour

1.20

Total standard cost per unit

.............

$

29.00

*Based on machine-hours.

Standard Quantity

or Hours

Standard Price

or Rate

Standard

Cost

Direct materials

....................

?

$6 per yard

$?

Direct labor

.......................

?

?

?

Variable manufacturing overhead

....

?

$3 per direct labor-hour

?

Total standard cost per unit

..........

$?

Materials

Used

Direct

Labor

Variable

Manufacturing

Overhead

Total standard cost allowed*

...................

$16,800

$21,000

$4,200

Actual costs incurred

..........................

$15,000

?

$3,600

Materials price variance

.......................

?

Materials quantity variance

.....................

$1,200 U

Labor rate variance

...........................

?

Labor efficiency variance

......................

?

Variable overhead rate variance

................

?

Variable overhead efficiency variance

. . . . . . . . . . .

?

*For the months production.

Final PDF to printer

Standard Costs and Variances

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The following additional information is available for Marchs production:

Actual direct labor-hours

..........................

1,500

Difference between standard and actual cost

per backpack produced during March

............

$0.15 F

Required:

(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.