Parsons Company is planning to produce 2,000 units of product in 2020. Each unit requires 3 pounds

Question:

Parsons Company is planning to produce 2,000 units of product in 2020. Each unit requires 3 pounds of materials at $5 per pound and a half-hour of labor at $16 per hour. The overhead rate is 70% of direct labor.


Instructions

a. Compute the budgeted amounts for 2020 for direct materials to be used, direct labor, and applied overhead.

b. Compute the standard cost of one unit of product.

c. What are the potential advantages to a corporation of using standard costs?

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Related Book For  book-img-for-question

Financial and Managerial Accounting

ISBN: 978-1119392132

3rd edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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