Question - Big dog company, a manufacturer of dog food, produces its product in 1000 bag batches. the standard cost of each batch consists of 8,000 pounds of direct materials at $0.30 per pound, 48 direct labor hours at $8.50per hour, and a variable overhead cost( based on machine hours) at the rate of 10$ per hour with 16 machines per batch. The following variable costs were incurred for the last 1,000 bag batch produced:
Direct Materials: 8,300 pounds costing $2,378 were purchased and used.
Direct Labor....45 hours costing $450
Variable overhead...$225
Machine hours used.... 18 hours
A. Determine the actual and standard variable cost 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 the direct materials, direct labor, and variable overhead.
C. Explains the possible causes for each of the variances determined in B.