23-3

1)

Standard Product Cost

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	$17.00 per hr.
	standard time per unit	4.00 hrs.
Direct materials (oak):	standard price	$10.50 per bd. ft.
	standard quantity	20 bd. ft.
Variable factory overhead:	standard rate	$2.80 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 . Using this principle, 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 24,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

Direct materials	$24,000
Direct labor	14,400
Total	$38,400

The standard materials price is $0.50 per pound. The standard direct labor rate is $10.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

Actual direct materials	$22,500
Actual direct labor	13,500
Total	$36,000

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 21,800 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	$
Direct labor time variance	$

3)

Flexible Overhead Budget

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 18,000 hours of productive capacity in the department:

Variable overhead cost:
Indirect factory labor	$158,400
Power and light	6,120
Indirect materials	46,800
Total variable overhead cost		$211,320
Fixed overhead cost:
Supervisory salaries	$73,960
Depreciation of plant and equipment	46,490
Insurance and property taxes	29,580
Total fixed overhead cost		150,030
Total factory overhead cost		$361,350

Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 16,000, 18,000, and 20,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	16,000	18,000	20,000
Variable overhead cost:
Indirect factory labor	$	$	$
Power and light
Indirect materials
Total variable factory overhead	$	$	$
Fixed factory overhead cost:
Supervisory salaries	$	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed factory overhead	$	$	$
Total factory overhead cost	$	$	$

4)

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,800 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	6,200 lb. at $5.60		6,100 lb. at $5.40
Direct labor	1,200 hrs. at $17.80		1,230 hrs. at $18.20
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,250 direct
	labor hrs.:
		Variable cost, $4.40	$5,230 variable cost
		Fixed cost, $7.00	$8,750 fixed cost

Each unit requires 0.25 hour of direct labor.

Required:

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials price variance	$
Direct materials quantity variance
Total direct materials cost variance	$

b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct labor rate variance	$
Direct labor time variance
Total direct labor cost variance	$

c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Variable factory overhead controllable variance	$
Fixed factory overhead volume variance
Total factory overhead cost variance	$