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Business

10 March, 09:59

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 9,000 pounds of direct materials at $0.40 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

11,300 pounds costing $4,378 were purchased and used

Direct labor

45 hours costing $450

Variable overhead

$250

Machine hours used

20 hours

(a) Determine the actual and standard variable costs per bag of dog food produced, separated into direct materials, direct labor, and variable overhead.