ACCT20200 Chapter 10: Section 10.1
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Diamond Company produces a single product. The company has set thefollowing standards for materials and labor: |
Standard quantity or hours per unit | Standard price or rate | |
Direct materials | ? pounds per unit | $? per pound |
Direct labor | 3.0 hours per unit | $11 per hour |
During the past month, the company purchased 8,200 pounds of directmaterials at a cost of $16,810. All of this material was used inthe production of 1,500 units of product. Direct labor cost totaled$51,920 for the month. The following variances have beencomputed: |
Materials quantity variance | $ | 1,645 | U |
Total materials variance | $ | 815 | F |
Labor efficiency variance | $ | 1,100 | F |
Required: | |
1. | For direct materials: |
a. | Compute the standard price per pound of materials. (Round yourintermediate calculations and final answer to 2 decimal places.Omit the "$" sign in your response.) |
Standard price | $ per pound |
b. | Compute the standard quantity allowed for materials for the month'sproduction. (Round yourintermediate calculations to 2 decimal places.) |
Standard quantity | pounds |
c. | Compute the standard quantity of materials allowed per unit ofproduct. (Round yourintermediate calculations to 2 decimal places.) |
Standard quantity | pounds per unit |
2. | For direct labor: |
a. | Compute the actual direct labor hours for the month. |
Actual direct labor hours |
b. | Compute the labor rate variance. (Input the amount as apositive value. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for noeffect (i.e., zero variance). Round yourintermediate calculations to 2 decimal places. Omit the "$" sign inyour response.) |
Labor rate variance | $ | (Click to select)FUNone |
Diamond Company produces a single product. Thecompany has set the following standards for materials andlabor:
Standard quantity or hours per unit | Standard price or rate | |
Direct materials | ?pounds per unit | $?per pound |
Direct labor | 4.0hours per unit | $10per hour |
During the past month, the company purchased11,000 pounds of direct materials at a cost of $30,250. All of thismaterial was used in the production of 1,700 units of product.Direct labor cost totaled $69,550 for the month. The followingvariances have been computed: |
Materials quantity variance | $ | 2,360 | U |
Total materials variance | $ | 160 | U |
Labor efficiency variance | $ | 3,000 | F |
Required: | |
1. | Fordirect materials: |
a. | Compute the standard price per pound ofmaterials. (Round yourintermediate calculations and final answer to 2 decimal places.Omit the "$" sign in your response.) |
Standard price | $per pound |
b. | Compute the standard quantity allowed formaterials for the month's production. (Round your intermediate calculations to 2decimal places.) |
Standard quantity | pounds |
c. | Compute the standard quantity of materialsallowed per unit of product. (Round your intermediate calculations to 2decimal places.) |
Standard quantity | pounds per unit |
2. | Fordirect labor: |
a. | Compute the actual direct labor hours for themonth. |
Actual direct labor hours |
b. | Compute the labor rate variance. (Input the amount as a positive value. Leaveno cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Round your intermediate calculations to 2decimal places. Omit the "$" sign in yourresponse.) |
Labor rate variance | $ | (Click to select)FUNone |
Hickory Furniture Company manufactures unfinished oak furniture.Hickory uses a A detailed estimate of what a product shouldcost.standard cost system. The direct labor, direct materials, andfactory overhead Performance goals, often relating to how much aproduct should cost.standards for an unfinished dining room tableare as follows:
Direct labor: | standard rate | $21 per hr. |
standard time per unit | 3 hrs. | |
Direct materials (oak): | standard price | $10 per bd. ft. |
standard quantity | 20 bd. ft. | |
Variable factory overhead: | standard rate | $2.4 per direct labor hr. |
Fixed factory overhead: | standard rate | $0.8 per direct labor hr. |
a. Determine the standard cost per dining roomtable. If required, round your answer to two decimal places.
$per table
b. A Accounting systems that use standards foreach element of manufacturing cost entering into the finishedproduct.standard cost system provides Hickory Furniture managementa cost control tool using the principle of management byexception
cost control
management by exception
. Using this principle, major < >majorminor costdeviations from standards can be investigated and corrected.