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.
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.
