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Highland Company produces a lightweight backpack. Standard variable costs per backpack are as follows:

Direct materials: $4.00 per yard

Variable manufacturing overhead: $2.00 per direct labor-hour
During March, 420 backpacks were manufactured and sold. Actual costs incurred and selected information for the month's production are provided. Answer the following questions:

What is the standard cost of a single backpack?
a. $10.00
b. $12.00
c. $14.00
d. $16.00

User Bensal
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1 Answer

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Final answer:

We cannot calculate the standard cost of a single backpack as critical information about the quantity of materials and labor hours per backpack is missing. A hypothetical example, assuming 1 yard per backpack and 2 hours per backpack, yields an average variable cost of $8.00, which doesn't match any given option.

This correct answer is none of the above.

Step-by-step explanation:

To determine the standard cost of a single backpack, we must sum the variable costs of direct materials and the variable manufacturing overhead.

According to the information given, we know the standard variable costs per backpack for direct materials are $4.00 per yard and for variable manufacturing overhead are $2.00 per direct labor-hour.

However, the question does not provide the quantity of direct materials or the number of direct labor-hours used per backpack, which are needed to compute the standard cost of a single backpack. Without this specific information, we cannot calculate the correct answer from the options provided (a. $10.00, b. $12.00, c. $14.00, d. $16.00).

Assuming a standard amount of materials is used (for example, 1 yard per backpack) and a standard number of labor hours is applied (for example, 2 hours per backpack), the calculation would be: ($4.00 for direct materials) + ($2.00 x 2 labor hours for variable manufacturing overhead) = $4.00 + $4.00 = $8.00.

This hypothetical example provides an average variable cost of $8.00 per backpack, which is not one of the options provided, likely because we need the actual standard amounts to compute the correct answer.

This correct answer is none of the above.

User Ksarunas
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7.8k points