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STANDARD COSTS AND VARIANCES Wakky Company produces widgets. In the table below, the company has begin the calculation of the standard cost to make one
STANDARD COSTS AND VARIANCES | |||||||||||||
Wakky Company produces widgets. In the table below, the company has begin the calculation of the standard | |||||||||||||
cost to make one widget. Using the standard manufacturing overhead data provided, complete the table | |||||||||||||
below to show the total manufacturing cost of one widget. The standards are to be computed based upon | |||||||||||||
normal annual production of | 70,000 | widgets for the year, with factory overhead applied based on direct | |||||||||||
labor hours. At the beginning of the year, management made the following estimates related to overhead: | |||||||||||||
Standard FOH Costs: | |||||||||||||
For Normal Capacity - (estimated at the beginning of the year for a production level of | 70,000 | widgets): | |||||||||||
Estimated annual variable overhead costs = | $808,500 | ||||||||||||
Estimated annual fixed overhead costs = | $241,500 | ||||||||||||
Total estimated annual overhead costs = | $1,050,000 | ||||||||||||
Total estimated annual direct labor hours (DLH) at | |||||||||||||
100% of normal capacity (70,000 widgets) = | 105,000 | Total DLHs | |||||||||||
Variable factory overhead rate per direct labor hour = | per DLH | ||||||||||||
Fixed factory overhead rate per direct labor hour = | per DLH | ||||||||||||
Predetermined factory overhead rate per DLH = | per DLH | ||||||||||||
1. | Complete the Standard Cost Report: | ||||||||||||
Wakky Company | |||||||||||||
Standard Cost Report | |||||||||||||
Product manufactured = | Widgets | Unit of Product = One Widget | |||||||||||
Manufacturing Cost Elements | Standard Quantity | Standard Price | Standard Cost | ||||||||||
Direct materials | 3 | pounds | $5.00 | per pound | |||||||||
Direct labor | 1.5 | DLHs | $12.00 | per DLH | |||||||||
Factory overhead applied: | |||||||||||||
Variable FOH | 1.5 | DLHs | per DLH | ||||||||||
Fixed FOH | 1.5 | DLHs | per DLH | ||||||||||
Calculated standard cost to manufacture 1 widget | |||||||||||||
2. | Calculate the standard costs allowed for the actual output level of widgets: | ||||||||||||
Standard cost | @ | 75,000 | widgets | Total | |||||||||
Direct materials cost | $ | per lb. | total lbs allowed | ||||||||||
Direct labor cost | $ | per DLH | total DLH allowed | ||||||||||
Factory overhead applied | $ | PFOH Rate | total DLH allowed | ||||||||||
Standard cost allowed for actual output level | |||||||||||||
Actual Production | |||||||||||||
The actual cost and amounts of input to make the actual output of | 75,000 | widgets for the year | |||||||||||
ended December 31, 2013 was: | Total | ||||||||||||
Direct materials: | 230,000 | lbs @ | $4.50 | per pound | |||||||||
Direct labor: | 111,000 | DLH @ | $13.25 | per DLH | |||||||||
Factory Overhead (FOH): | |||||||||||||
Total variable FOH costs | $850,000 | ||||||||||||
Total fixed FOH costs | $241,500 | ||||||||||||
Total actual FOH costs for 2013 | |||||||||||||
Actual cost for actual output level | |||||||||||||
3. | Calculate the total manufacturing cost variance | ||||||||||||
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