You have been asked as a consultant to assist Lifetime Adventures Company in recovering from a recent computer hacking incident. The company produces a survival kit. Unfortunately, due to the computer hacking incident, only the following data from the standard cost card relating to production of a single survival kit are given below:

	Standard quantity	Standard price	Standard cost per kit
Direct material		$6 per yard
Diract labor
Varibale production overhead		$3 per direct labor hour
Total

Through interviews with company personnel, you learned variable production overhead is applied to production on the basis of direct labor-hours. During a recent month, 1,000 survival kits were produced and sold. The only other information recovered from the company’s database relating to the recent month’s production and the related variance analysis is given below.

Variance Analysis	Materials used	Direct labor	Variable production overhead
Standard cost for $1,000 kits	$16,800	$10,500	$4,200
Actual costs incurred	$15,000		$3,600
a. materials price variance
materials quantity variance	$1,200 U
b. Labor efficiency variance
c. labor efficiency variance
d. variable overhead rate variance
e. variable overhead efficiency variance

Further interviews with company personnel revealed the following for the recent month’s production

Actual Direct Labor Hours Worked: 1,500: Standard variable overhead rate per direct labor hour $3.00.

Difference between the standard and actual cost per kit during the recent month: $.15 Favorable. The company had no beginning or ending inventories of materials.

Answer rating: 100% (QA)

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