Reference no: EM131911368
Question - Determining unit costs, variance analysis and interpretation
Big Dog Company, a manufacturer of dog food, produces its product in 1,000 bag batches. The standard cost of each batch consists of 8000 pounds of direct materials at $0.30 per pound, 48 direct labor hours at $8.50 per hour, and variable overhead cost (based on machine hours) at the rate of $10 per hour with 16 machine hours per batch. The following variable costs were incurred for the last 1,000 bag batch produced:
Direct materials...... 8300 pounds costing $2,378 were purchased and used
Direct Labor....... 45 hours costing $450
Variable overhead..... $225
Machine hours used.... 18 hours
Required:
a. Determine the actual and standard variable costs per bag of dog food produced, separated into direct materials, direct labor and variable overhead.
b. For the last 1,000 bag batch, determine the standard cost variances for direct materials, direct labor, and variable overhead.
c. Explain the possible causes for each of the variances determined in requirement (b).
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: Determine the actual and standard variable costs per bag of dog food produced, separated into direct materials, direct labor and variable overhead
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