Highland company produces a lightweight backpack that is popular with college students. standard variable costs relating to a single backpack are given below

Answer and Explanation:

ParticularsAmount

Standard variable manufacturing overhead cost for march$960

Standard variable manufacturing overhead rate per direct labor hour$2

Standard direct labor hours for march

=960/2

= $ 480

Standard direct labor rate per hour

=$ 5,040/$480

= $ 10.5

The labor efficiency variance

Actual Cost per unit of back pack production

=(9,120+5,040+960)/(400)

=15,120/400

=$ 37.8

Total Number of produced Back packs 400

Total Actual cost of production $ 15,120

Less: Actual cost of materials$5,520

Actual cost of manufacturing Overhead2,620

Actual cost of Direct Labor6,980

Labor efficiency varaince= 5040-6980= -$ 1940

Variable overhead rate variance=(Actual Hour*Actual Rate)-(Actual Hour of input*Standard Rate)

=(2620*2)

= $ 5240

Variable overhead rate variance = $ 5240