All necessary workings should be shown. Where appropriate, secondary sources of information used in your report should be referenced accordingly. All solutions must be in a MS Word format, font 12, margins of 1 inch all sides on letter-sized paper and double-spaced except for numerical workings which can be single- spaced. 3. Calibur Tool Company manufactures a single product. The following information is available regarding the standards for the product: Each saleable finished unit consists of 5 grams of direct materials. As a result of the nature of the direct materials used and the production process, 12.25% of the direct materials used in production are lost. The ideal direct labour time required to produce one saleable finished unit is 1.5 hours. Direct labour is paid for 8 hours, which includes an hour for breaks and cleanup. 5% of the units produced have to be scrapped (at zero value) due to poor quality. Direct materials cost $400 per kilogram plus an additional 25% for customs and excise duties and shipping costs. Direct labour is paid at $20 per hour. Variable overhead is allocated using direct labour-hours as a base, at a rate of $5 per hour. During June, 2,000 units were produced. The costs associated with June's operations were as follows: Materials purchased: 18 kilograms at $600/kg $10,800 Materials used in production: 14 kilograms- Direct labour: 4,000 hours at $19.50 per hour $78,000 Variable manufacturing overhead costs incurred $20,800 Required: a) Develop a standard cost card for the product produced by Company (use Exhibit A as a guide). b) Compute the materials, labour, and variable manufacturing overhead variances for the month of June. EXHIBIT A (1) (2) Standard Quantity or Hours Standard Price or Rate (3) Standard Cost (1) X (2) Inputs Direct Materials Direct Labour Variable Manufacturing Overhead Total standard cops per unit All necessary workings should be shown. Where appropriate, secondary sources of information used in your report should be referenced accordingly. All solutions must be in a MS Word format, font 12, margins of 1 inch all sides on letter-sized paper and double-spaced except for numerical workings which can be single- spaced. 3. Calibur Tool Company manufactures a single product. The following information is available regarding the standards for the product: Each saleable finished unit consists of 5 grams of direct materials. As a result of the nature of the direct materials used and the production process, 12.25% of the direct materials used in production are lost. The ideal direct labour time required to produce one saleable finished unit is 1.5 hours. Direct labour is paid for 8 hours, which includes an hour for breaks and cleanup. 5% of the units produced have to be scrapped (at zero value) due to poor quality. Direct materials cost $400 per kilogram plus an additional 25% for customs and excise duties and shipping costs. Direct labour is paid at $20 per hour. Variable overhead is allocated using direct labour-hours as a base, at a rate of $5 per hour. During June, 2,000 units were produced. The costs associated with June's operations were as follows: Materials purchased: 18 kilograms at $600/kg $10,800 Materials used in production: 14 kilograms- Direct labour: 4,000 hours at $19.50 per hour $78,000 Variable manufacturing overhead costs incurred $20,800 Required: a) Develop a standard cost card for the product produced by Company (use Exhibit A as a guide). b) Compute the materials, labour, and variable manufacturing overhead variances for the month of June. EXHIBIT A (1) (2) Standard Quantity or Hours Standard Price or Rate (3) Standard Cost (1) X (2) Inputs Direct Materials Direct Labour Variable Manufacturing Overhead Total standard cops per unit
