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 RateStandard Cost Direct materials? $ 6.00 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, 400 backpacks were manufactured and sold. Selected information relating to the month’s production is given below: Materials Used Direct LaborVariable Manufacturing Overhead Total standard cost allowed*$ 9,120 $ 5,040$ 960 Actual costs incurred$ 5,520 ?$ 2,620 Materials price variance? Materials quantity variance$ 1,920 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-hours600 Difference between standard and actual cost per backpack produced during March$ 0.20F What was the variable overhead rate variance for March? The variable overhead efficiency variance?Prepare a standard cost card for one backpack.

A standard cost card refers to a card that contains the standard rate of all the materials, labor,…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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	?	$ 6.00 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, 400 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*	$ 9,120	$ 5,040	$ 960
Actual costs incurred	$ 5,520	?	$ 2,620
Materials price variance	?
Materials quantity variance	$ 1,920 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	600
Difference between standard and actual cost per backpack produced during March	$ 0.20	F

What was the variable overhead rate variance for March? The variable overhead efficiency variance?

Prepare a standard cost card for one backpack.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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