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Homework answers / question archive / Kansas Company uses a standard cost accounting system
Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,000 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,000 direct labor hours. During the year, 117,000 pounds of raw materials were purchased at $0.92 per pound. All materials purchased were used during the year.
Instructions
(a) If the materials price variance was $3,510 favorable, what was the standard materials price per pound?
(b) If the materials quantity variance was $4,750 unfavorable, what was the standard materials quantity per unit?
(c) What were the standard hours allowed for the units produced?
(d) If the labor quantity variance was $7,200 unfavorable, what were the actual direct labor hours worked?
(e) If the labor price variance was $9,080 favorable, what was the actual rate per hour?
(f) If total budgeted manufacturing overhead was $360,000 at normal capacity, what was the predetermined overhead rate?
(g) What was the standard cost per unit of product?
(h) How much overhead was applied to production during the year?
(i) Using one or more answers above, what were the total costs assigned to work in process?
(a) $3,510 ÷ 117,000 = $.03; $.92 + $.03 = $.95 standard materials price per pound. OR
117,000 X $.92 = $107,640; $107,640 + $3,510 = $111,150; $111,150 ÷ 117,000 = $.95 per pound.
(b) $4,750 ÷ $.95 = 5,000 pounds; 117,000 – 5,000 = 112,000 standard quantity for 28,000 units or 4.0 pounds (112,000 ÷ 28,000) per unit. OR
$111,150 – $4,750 = $106,400; $106,400 ÷ $.95 = 112,000; 112,000 ÷ 28,000 = 4.0 pounds per unit.
(c) Standard hours allowed are 44,800 (28,000 X 1.6).
(d) $7,200 ÷ $12.00 = 600 hours over standard; 44,800 standard hours +
600 hours = 45,400 actual hours worked. OR
44,800 X $12 = $537,600; $537,600 + $7,200 = $544,800; $544,800 ÷ $12 = 45,400 actual hours worked.
(e) $9,080 ÷ 45,400 = $.20; $12.00 – $.20 = $11.80 actual rate per hour. OR
$544,800 – $9,080 = $535,720; $535,720 ÷ 45,400 = $11.80 actual rate per hour.
(f) $360,000 ÷ 50,000 = $7.20 predetermined overhead rate per direct labor hour.
(g) Direct materials 4.0 pounds X $.95 = $3.80; direct labor 1.6 X $12.00 = $19.20; manufacturing overhead 1.6 X $7.20 = $11.52. $3.80 + $19.20 + $11.52 = $34.52 standard cost per unit.
(h) 44,800 X $7.20 = $322,560 overhead applied.
(i) $34.52 [see (g) above] X 28,000 = $966,560 or direct materials $106,400 + direct labor $537,600 + overhead applied $322,560 = $966,560.
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