Affordable Handbags Company (AHC) has been in business for three years and is growing steadily through...

 

 

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Affordable Handbags Company (AHC) has been in business for three years and is growing steadily through an increase in product production. The company creates three handbag-style products: shoulder bags, wallets, and strapless buckle bags. AHC began as a single-person entrepreneurship venture in which the CEO designed each bag design. It uses two assembly lines to build products, as the wallets are assembled separately from the additional handbag styles. Business has increased by direct costs, and the products are marketed and sold online through two different vendors. You have been tasked as a cost accountant to assist AHC in conducting an Overhead and Variance Analysis that identifies product direct costs. Write an essay that includes your findings in 800-1,000 words. Explain your findings as well as the general concepts related to overhead variance analysis. While outside sources are NOT required for this assignment, formatting and citations for all parts of this assignment should be done in APA format. For more information on APA format, please see the following lesson: . What is APA Formatting: Style & Definition APA Citation: Formats & Examples Prompt Evaluate the standard and actual cost sheets provided to calculate direct product costs for AHC. Allocate the overhead cost and provide a detailed variance analysis including both rate and volume variances for labor, raw materials, and factory overhead. First, calculate the standard dollar costs for the units of output. Then provide a detailed analysis using all six variances. Required: . Compute the standard dollar costs for the units of output. Compute AHC factory overhead volume variance. Compute a detailed analysis of AHC Labor using both rate and volume variance. Compute a detailed analysis of AHC Raw materials using both rate and volume variance. Compute a detailed analysis of AHC Factory Overhead using both rate and volume variance. Production & Cost Description Annual Production Raw materials in inches per unit (Width x Height x Depth = Volume) Raw materials price per unit volume Assembly labor time (hours per unit) Labor pay rate Assembly department overhead per direct labor hour Color dying process machine hours (MH) Painting department overhead per MH Sales price Fixed Cost Variable SG&A Fixed SG&A Production & Cost Amounts 1500 shoulder bags 2000 wallets 1000 buckle bags 1 shoulder bag = 12' W x 15' H x 8' D 1 wallet = 6' W x 10' H x 5' D 1 buckle bag = 13' W x 16' H x 10' D $1 per inch 1 shoulder bag = 4 hours 1 wallet = 2 hours 1 buckle bag = 4 hours $20 per hour $10 1 shoulder bag = 0.5 MH 1 wallet = 0.5 MH 1 buckle bag = 0.5 MH $20 1 shoulder bag = $150 1 wallet = $70 1 buckle bag = $200 $10,000 $5 per unit for all three types (bags, wallets, buckles) $25,000 Actual amount of material purchased and used 9,990,000 inches The actual cost of material purchased and used $9,990,000 The actual amount of direct labor hours The actual cost of direct labor Actual production in units Actual overhead spending Raw materials price per unit 20,000 $450,000 Shoulder bags = 2,775 = Wallets 2,829 Buckle Bags = 1,380 $378,773 $0.95. in. Affordable Handbags Company (AHC) has been in business for three years and is growing steadily through an increase in product production. The company creates three handbag-style products: shoulder bags, wallets, and strapless buckle bags. AHC began as a single-person entrepreneurship venture in which the CEO designed each bag design. It uses two assembly lines to build products, as the wallets are assembled separately from the additional handbag styles. Business has increased by direct costs, and the products are marketed and sold online through two different vendors. You have been tasked as a cost accountant to assist AHC in conducting an Overhead and Variance Analysis that identifies product direct costs. Write an essay that includes your findings in 800-1,000 words. Explain your findings as well as the general concepts related to overhead variance analysis. While outside sources are NOT required for this assignment, formatting and citations for all parts of this assignment should be done in APA format. For more information on APA format, please see the following lesson: . What is APA Formatting: Style & Definition APA Citation: Formats & Examples Prompt Evaluate the standard and actual cost sheets provided to calculate direct product costs for AHC. Allocate the overhead cost and provide a detailed variance analysis including both rate and volume variances for labor, raw materials, and factory overhead. First, calculate the standard dollar costs for the units of output. Then provide a detailed analysis using all six variances. Required: . Compute the standard dollar costs for the units of output. Compute AHC factory overhead volume variance. Compute a detailed analysis of AHC Labor using both rate and volume variance. Compute a detailed analysis of AHC Raw materials using both rate and volume variance. Compute a detailed analysis of AHC Factory Overhead using both rate and volume variance. Production & Cost Description Annual Production Raw materials in inches per unit (Width x Height x Depth = Volume) Raw materials price per unit volume Assembly labor time (hours per unit) Labor pay rate Assembly department overhead per direct labor hour Color dying process machine hours (MH) Painting department overhead per MH Sales price Fixed Cost Variable SG&A Fixed SG&A Production & Cost Amounts 1500 shoulder bags 2000 wallets 1000 buckle bags 1 shoulder bag = 12' W x 15' H x 8' D 1 wallet = 6' W x 10' H x 5' D 1 buckle bag = 13' W x 16' H x 10' D $1 per inch 1 shoulder bag = 4 hours 1 wallet = 2 hours 1 buckle bag = 4 hours $20 per hour $10 1 shoulder bag = 0.5 MH 1 wallet = 0.5 MH 1 buckle bag = 0.5 MH $20 1 shoulder bag = $150 1 wallet = $70 1 buckle bag = $200 $10,000 $5 per unit for all three types (bags, wallets, buckles) $25,000 Actual amount of material purchased and used 9,990,000 inches The actual cost of material purchased and used $9,990,000 The actual amount of direct labor hours The actual cost of direct labor Actual production in units Actual overhead spending Raw materials price per unit 20,000 $450,000 Shoulder bags = 2,775 = Wallets 2,829 Buckle Bags = 1,380 $378,773 $0.95. in.

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Overhead Variance Analysis for Affordable Handbags Company AHC Introduction Overhead variance analysis is a valuable tool used by cost accountants to evaluate the difference between the actual costs i... View the full answer