Question

1.

Sana Rosa Furniture Company manufactures designer home furniture. Sana Rosa uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining room table are as follows:

Direct labor:	standard rate	$22.00 per hr.
	standard time per unit	3.00 hrs.
Direct materials (oak):	standard price	$12.00 per bd. ft.
	standard quantity	17 bd. ft.
Variable factory overhead:	standard rate	$3.20 per direct labor hr.
Fixed factory overhead:	standard rate	$0.80 per direct labor hr.

a. Determine the standard cost per dining room table. If required, round your answer to two decimal places.
$ per dining room table

b. A standard cost system provides Rosa Furniture management a cost control tool using the principle of cost control . Using this principle, major  cost deviations from standards can be investigated and corrected.

2.

Direct Materials and Direct Labor Variances

At the beginning of June, Kimber Toy Company budgeted 13,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

Direct materials	$31,850
Direct labor	7,800
Total	$39,650

The standard materials price is $0.70 per pound. The standard direct labor rate is $12.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

Actual direct materials	$28,800
Actual direct labor	7,000
Total	$35,800

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 11,400 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials quantity variance	$	Unfavorable
Direct labor time variance	$	Unfavorable

Answer 1

Answer:

A.        

Direct labor..........................................	..............  $22.00	X	3.0 hrs.	$ 66.00
Direct materials....................................	..............  $12.00	X	17 bd. ft.	204
Variable factory overhead...................	..............  $3.20	X	3.0 hrs.	9.60
Fixed factory overhead....................... Total cost per unit...........................	..............  $0.80	X	3.0 hrs.	2.4 $282.00

B.        A standard cost system provides the company’s management a cost control tool using the principle of management by exception. Using this principle, costs that deviate significantly from standards can be investigated and corrected. The standard cost system also can be used to motivate employees to work efficiently with their time, use of materials, and other factory overhead resources.

Answer:

Step 1:

Determine the standard direct materials and direct labor per unit.

Standard direct materials quantity per unit:

Direct materials lb. budgeted for June:

$31850 / $0.7 per lb. = 45500 lb

Standard pounds per unit:

45500 lb. / 13000 units = 3.5 standard b. per unit

Standard direct labor time per unit:

Direct labor hrs. budgeted for June:

$7000 / $12 per = 583.33 direct labor hrs.

Standard direct labor hrs. per unit:

583.33 hrs. / 13000 units = 0.04 standard direct labor hr. per unit

Step 2:

Using the standard quantity and time rates in step 1, determine the standard costs for the actual June production.

Standard direct materials at actual volume:

11400 units × 3.5 lb. per unit × $0.7………………………………… $ 27930

Standard direct labor at actual volume:

11400 units × 0.04 direct labor hr. per unit × $12...………………… 5472

Total………………………………………………………….………….. $33402

Step 3:

Determine the direct materials quantity and direct labor time variances, assuming no direct materials price or direct labor rate variances.

Actual direct materials used in production……………………………………… $28800

Standard direct materials (step 2)………………………………………………… 27930

Direct materials quantity variance—unfavorable…………………………………$ (870)

Actual direct labor……………………………………………………………..… $7000

Standard direct labor (step 2)….………………………………………………… 5472

Direct labor time variance—unfavorable………………………………….…… $ (1528)