Standard Product Cost Cumberland Furniture Company manufactures unfinished oak f

Question

Standard Product Cost

Cumberland Furniture Company manufactures unfinished oak furniture. Cumberland uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining room table are as follows:
Direct Labor: standard rate: $16/hr
Standard time/unit: 1.8hr
Direct materials (oak): Standard price: $12.50 per bd ft
Standard qty: 17 bd ft
Variable factory overhead: standard rate: $2.40 per direct labor hr
Fixed factory overhead: Standard rate: $1.10 per direct labor hr


a. Determine the standard cost per dining room table. If required, round your answer to two decimal places.
$

b. Why would Cumberland use a standard cost system?

Explanation / Answer

a. standard cost per dining room table: 212.50 direct materials (12.50*17) 28.80 direct labor (16*1.8) 4.32 variable OH (2.4*1.8) 1.98 fixed OH (1.1*1.8) 247.60 total answer: $247.60 b. To control costs. They can use the standard to make a budget. They can use the standards to perform variance analysis to see in what areas they need to control costs better.

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