Solved: 1. Outdoors Adventure Inc. Manufactures Hiking Bac… |

1.             Outdoors Adventure Inc. manufactures hiking backpacks with thefollowing standard cost structure:

STANDARD COST SHEET: HIKING BACKPACKS

Metal tubing
Leather
Padding
Direct labor

6 meters @ RM3/meter
2 square meters @ RM7/sq. meters
3 kilograms @ RM4/kilogram
4 hours @ RM15/hour

RM18.00
14.00
12.00
60.00

Total standardcost                                                                                    RM104.00

During December 2016, 500 backpackswere manufactured and the following costs incurred:

ACTUAL COST INCURRED FOR DECEMBER 2016: HIKING BACKPACKS

Metal tubing
Leather
Padding
Direct labor

3,100 meters
1,100 square meters
1,600 kilograms
1,800 hours

RM 9,455
7,722
6,560
27,270

Totalcost                                                                                                  RM 51,007

Required:

a.     Calculate the material price variance, material usage variance,labor rate variance and labor efficiency variance. Note that formaterial variance, there are three (3) materials used in theproduction of the backpacks. You have to calculate the variancesfor each material and then the total for material variance.

        
b.      Writea short report summarizing and analyzing the manufacturingoperations of Outdoor Adventures Inc. for the month of December2016.

 
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