Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials ? $ 4.00 per yard $ ? Direct labor ? ? ? 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, 700 backpacks were manufactured and sold. Selected information relating to the month’s production is given below: Materials Used Direct Labor Variable Manufacturing Overhead Total standard cost allowed* $ 11,200 $ 10,500 $ 2,100 Actual costs incurred $ 8,925 ? $ 4,032 Materials price variance ? Materials quantity variance $ 700 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 1,050 Difference between standard and actual cost per backpack produced during March $ 0.34 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. 7. What was the variable overhead rate variance for March? The variable overhead efficiency variance? 8. Prepare a standard cost card for one backpack. Can you help me with this problem with an explanation, please? Thank you :)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below:
| Standard Quantity or Hours | Standard Price or Rate | |||
|---|---|---|---|---|
| Direct materials | ? | $ 4.00 | per yard | $ ? |
| Direct labor | ? | ? | ? | |
| Variable manufacturing |
? | $ 2 | per direct labor-hour | ? |
| Total standard cost per unit | $ ? |
Overhead is applied to production on the basis of direct labor-hours. During March, 700 backpacks were manufactured and sold. Selected information relating to the month’s production is given below:
| Materials Used | Direct Labor | Variable Manufacturing Overhead | ||
|---|---|---|---|---|
| Total standard cost allowed* | $ 11,200 | $ 10,500 | $ 2,100 | |
| Actual costs incurred | $ 8,925 | ? | $ 4,032 | |
| Materials price variance | ? | |||
| Materials quantity variance | $ 700 | 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 | 1,050 | |
|---|---|---|
| Difference between standard and actual cost per backpack produced during March | $ 0.34 | 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.
7. What was the variable overhead rate variance for March? The variable overhead efficiency variance?
8. Prepare a standard cost card for one backpack.
Can you help me with this problem with an explanation, please? Thank you :)
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