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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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