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Homework answers / question archive / Kansas Company uses a standard cost accounting system

Kansas Company uses a standard cost accounting system

Management

Kansas Company uses a standard cost accounting system. In 2020, the company produced 27,800 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 50,500 direct labor hours. During the year, 131,400 pounds of raw materials were purchased at $0.95 per pound. All materials purchased were used during the year.

 

a-If the materials price variance was $5,256 favorable, what was the standard materials price per pound? 

 

b-If the materials quantity variance was $19,998 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 $8,400 unfavorable, what were the actual direct labor hours worked?

 

e-If the labor price variance was $18,072 favorable, what was the actual rate per hour?

 

f-If total budgeted manufacturing overhead was $343,400 at normal capacity, what was the predetermined overhead rate based on direct labor hours?

 

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?

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a)

Material price variance = (Actual price - Standard price) x Actual quantity

-$5,256 = ($0.95 - Standard price) * 131,400        

-$5256/131,400 = $0.95 - Standard price

- $0.04 = $0.95 - Standard price

Standard price = $0.95 + $0.04 = $0.99 per pound

 

b)

Material quantity variance = (Actual quantity - Standard quantity) x Standard price per pound

$19,998 = (131,400 - Standard quantity) * $ 0.99

$19,998/$0.99 = (131,400 - Standard quantity)

           20,200 = (131,400 - Standard quantity)

Standard quantity = 131,400 - 20,200 = 111,200

Standard quantity per unit = 111,200/27,800 units = 4 pounds

 

c) 

Standard Hours Allowed for Units Produced = Standard Hours * Actual Units Produced

= 1.6*27,800 units 

Standard Hours Allowed for Units Produced = 44,480 Hours

 

d) 

Labor Quantity Variance = Standard Rate * (Standard Hours-Actual Hours)

-8,400 = $12 * (44,480-Actual Hours)

-8,400/12 = 44,480-Actual Hours

-700 = 44,480 - Actual Hours 

Actual Hours = 44,480+700

Actual Hours = 45,180 Hours

 

 

e) 

Labor Rate Variance = Actual Hours*(Standard Rate - Actual Rate)

18,072 = 45,180 * ($12 - Actual Rate)

18,072/45180 = $12 - Actual Rate 

0.40 = $12 - Actual Rate 

Actual Rate = $12 - 0.40 

Actual Rate = $11.60

 

f) 

Predetermined Overhead Rate =   Total Budgeted Overhead/Budgeted Labor Hour 

= $343,400/50,500

Predetermined Overhead Rate = $6.80

 

g)  

Standard COst per Unit of Product:

Standard Material Price Unit (4*0.99) = 3.96

Standard Labor Rate per Unit (1.6*12) = 19,2

Standard Overhead Rate per Unit (1.6*6.80) = 10.88

Total Standard Cost per Unit = 34.04

 

h) 

Overhead Applied = Actual Hours Worked*Predetermined Overhead rate

= 45,180*$6.80 

Overhead Applied = $307,224

 

i) 

Total Costs assigned = 27,800 Units*$34.04 = $946,312

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