| Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not ideal at this point, but the management is working toward that as a goal. At present, the company uses the following standards. | Materials | | Item | Per unit | Cost | | Metal | 1 lb. | 63 per lb. | | Plastic | 12 oz. | $1.00 per lb. | | Rubber | 4 oz. | 88 per lb. | | Direct labor | | Item | Per unit | Cost | | Labor | 15 min. | $8.00 per hr. | | Predetermined overhead rate based on direct labor hours = $4.28 | The January figures for purchasing, production, and labor are: | The company purchased 229,000 pounds of raw materials in January at a cost of 78 a pound. | | Production used 229,000 pounds of raw materials to make 115,500 units in January. | | Direct labor spent 18 minutes on each product at a cost of $7.80 per hour. | | Overhead costs for January totaled $54,673 variable and $73,800 fixed. | Answer the following questions about standard costs. | |
