varianees with muLtipLe independent variabLes Ralph's Fancy Costing Company (RFCC) produees a variety of fabricated products to customer order. Product costing and budgeting at RFCC are based on the following LLAs:

direct labor: DL$ = 35DLH (where DLH denotes direct labor hours);

direct material: DM$ = prieed per market; a just-in-time inventory policy is in plaee;

overhead: OV = 450,000 + 1.2(DL$) + 3(DM$) + 2,700(numberof setups);

G&A: 400,000 + .1(DL$+DM$+OV).

For full costing purposes, RFCC assigns the "fixed" overhead to produets at a rate of 85% of variable overhead.

During areeent period, three separate products were manufactured. Their standard eosts are based on the following estimates:

produet 1 product l direet labor hours 1,000 4,000 direet material $45,000 $30,000 number of setups 5 14 In addition, the following costs were incurred:

direet labor (9,000 hours)

direet materials overhead G&A 320,000 125,000 1,200,000 520,000 produd 3 3,000

$25,000 20 a] Detennine the standard variable and full product costs for eaeh product, as they would be reported by a typical standard costing system.

b] Determine the estimated contribution margin for eaeh produet. Forthis purpose assume produet 1 sells for Pl , product 2 for P2 and produet 3 for P3.

e] Calculate all relevant varianees.

AppendixLO1