THERE

Assembler B labor (3 brs$13 Therefore, o y o f part of Rs cost control program, Tracer Company uses a standard costing system for all manufactured re not revised until the beginning of the next fiscal year they occur by the inclusion of planned vaniances he following direct labor standard was established for one of Tracers products, effective une 1, 2012 Assembler A labor (S hrs.@$10) Assembler b labor (3 hrs$1) items. The standard cost for each tem is established at the begining of the fiscal year, and the standards year by changes in direct materials or direct labor inputs or by changes in the manufacturing process, are recognized a Changes in costs, caused duning the in Tracer's monthly operating budgets the beginning of the fiscal year s so $15) Standard cost per 100 unts $113 The standard was based on the direct labor being performed by a team consting of five persons with Assembler A skils, three persons with Assembler e skoils, and two persons with machinist skils; ths team represents the most efficlent use of the company's skilled employees. The standard also assumed thst the quality of drect materniais that had been used in prior years would be available for the coming yea the company has received a significant increase in orders, and there is an nsufficient number of skilled workers to meet the increased production. Therefore, beginning in January, the production teams will consist of eight persons with Assembler A skils, one person with Assembler B skilis, and one person with machinist skills. The reorganized teams will work more slowly than the normal teams, and as a result, only 80 units will be produced in the same time period in which 100 units would normally be produced. Fauity work has never been a cause for units to be rejected in the final inspection process, and it is not expected to be a cause for rejection with the reorganized teams Furthermore, Tracer has been notfied by its direct materials supplier that lower-quality drect matenials will be supplied beginning January 1. Normally, one unit of direct materials is required for each good unt produced, and no units are lost due to defective direct materials. Tracer estimates that 6 percent of the units manufactured after January 1 will be rejected in the final inspection process due to defective direct Tracer has been notified by its direct materials supplier that lower-quality direct matenials will be supplied beginning January 1. Normally, one unit of direct materials is required for each good produced, and no units are lost due to defective direct materials. Tracer estimates that 6 percent of the units manufactured ater January 1 will be rejected in the final inspection process due to defective direct the number of units of lower qualty direct materials that Tracer Company must enter into production in order to produce 47,000 good finished units units 2. How many hours of each class of direct labor must be used to manufacture 47,000 good finished units? 3. Determine the amount that should be indluded in Tracer's January operating budget for the planned drect labor variance caused by the reorganization of the direct labor teams and the lower quality direct carry the direct labor cost per unit to 3 decimal places. (CMA adapted) Standard Costing: Planned Variances As part of its cost control program, Tracer Company uses a standard costing system for all manufactured items. The standard cost for each item is established at the beginning of the fiscal year, and the standards are not revised until the beginning of the next fiscal year. Changes in costs, caused during the year by changes in direct materials or direct labor inputs or by changes in the manufacturing process, are recognized as they occur by the inclusion of planned variances in Tracer's monthly operating budgets. The following direct labor standard was established for one of Tracer's products, effective June 1, 2012, the beginning of the fiscal year: Assembler A labor (5 hrs.$1O) Assembler B labor (3 hrs.@$11) Machinist labor (2 hrs.$15) $50 30 Standard cost per 100 units $113 The standard was based on the direct labor being performed increase in orders, and there is an insufficient number of skilled workers to meet the increased production. Therefore, beginning in January, the production teams will consist of eight persons with Assembler A skills, one person with Assembler B skills, and one person with machinist skills. The reorganized teams will work more slowly than the normal teams, and as a result, only 80 units will be produced in the same time period in which 100 units would normally be produced. Faulty work has never been a cause for units to be rejected in the final inspection process, and it is not expected to be a cause for rejection with the reorganized teams Furthermore, Tracer has been notified by its direct materials supplier that lower-quality direct materials will be supplied beginning January 1. Normally, one unit of direct materials is required for each good unit produced, and no units are lost due to defective direct materials. Tracer estimates that 6 percent of the units manufactured after January 1 will be reierted in the final insnertion nrocess die to defertive dirert rejected in the Tinal inspection process due to defective direct materials. Required: 1. Determine the number of units of lower quality direct materials that Tracer Company must enter into production in order to produce 47,000 good finished units. units 2. How many hours of each class of direct labor must be used to manufacture 47,000 good finished units