Question

Your supervisor has asked you to prepare some calculations based on the company’s data and then research publicly available similar competitor information to see how your company is performing within the industry. Your company, CarryIt Inc., produces mass quantity, inexpensive tote bags for promotional marketing purposes, which is a very competitive business. Here is the available data for your company: Labor hours .25; Labor rate $11.75/hour; Materials input 0.5 yds. fabric; Materials price $1.50/yd.; and Variable overhead rate $5.00 per direct labor hour. You are also able to find an industry profile report via a Dun & Bradstreet database that has selected data from a few other companies in similar businesses as well as some industry statistic.
Unit Variable Cost Item Star Company GoldBag Corporation PromoTotes LLC Industry Data
Labor hours 0.35 0.20 0.30 0.30
Labor rate $11.25 $11.95 $12.50 $11.65
Materials input 0.45 yds. 0.675 yds. 0.50 yds. 0.55 yds.
Materials price $1.65/yd. $1.35/yd. $1.55/yd. $1.50/yd.
Variable OH rate $6.00 per direct labor hour $5.25 per direct labor hour $4.70 per direct labor hour $5.45 per direct labor hour

Required:
Compute the following measures:

a. Total variable cost per unit for CarryIt, the competitors, and the industry average.
b. What is the percentage of the total for each component (materials, labor, and variable overhead)?
c. Assume industry data is your benchmark. What are the price and efficiency variances for direct materials and direct labor for each company?
d. What is the percentage over standard by company and by variance?

Answer 1

Answer:

Assume industry data is your benchmark. What are the price and efficiency variances for direct materials and direct labor for each company