COST ACCOUNTING Standard Costing

QUESTION

Mak Cook factory from the kitchen equipment division of PT X produces Teflon bread grills. Sam is the director of the factory and uses a standard cost system for calculating production costs and control. The standard charge card for 1 unit of Teflon bread grill is:

Direct material (3 pounds @ $5,000)	$15,000
Direct labor (0.8 hours @ $12,000)	9,600
Variable Factory Overhead Costs (0.8 hours @ $5,000)	4,000
Fixed Factory Overhead Costs (0.8 hours @ $3,000)	2,400
Cost per standard unit	$31,000

During the current year, the factory has actual production activities as follows:

1. Total production of bread grills of 50,000 units.
2. A total of 130,000 pounds of raw materials were purchased at a price of $4,700 per pound.
3. There are 30,000 pounds of raw materials in beginning inventory (recorded at a price of $5,000 per pound). No ending inventory.
4. The Company uses 41,000 hours of direct work at a total cost of $533,000,000.
5. Actual fixed Factory Overhead Costs amounted to $99,000,000.
6. Actual variable Factory Overhead Costs amounted to $215,000,000.

The normal activity of the factory is 45,000 units per year. Standard Factory Overhead Cost Rates are calculated based on normal activity measured in standard direct labor hours.

Asked:

1. Calculate the price variants and the use of raw materials.
2. Calculate variations in rates and direct labor efficiency.
3. Calculate the cost variants and efficiency of variable Factory Overhead Costs.
4. Calculate the expense variant and fixed Factory Overhead Cost volume.
5. Assume that the buying agent for the bread buys lower quality raw materials from a new supplier. Would you recommend Mak Cook factory to keep using this cheaper raw material? If so, what standards might need to be revised to reflect this decision? Assume that the quality of the final product has no significant effect.