Kansas Company uses a standard cost accounting system. In 2014, the company prod
ID: 2427834 • Letter: K
Question
Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,100 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,390 direct labor hours. During the year, 131,800 pounds of raw materials were purchased at $0.91 per pound. All materials purchased were used during the year.
(a) If the materials price variance was $2,636 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.) Standard materials price per pound:
(b) If the materials quantity variance was $15,429 unfavorable, what was the standard materials quantity per unit? (Round answer to 1 decimal places, e.g. 1.5.) Standard materials quantity per unit: (c) What were the standard hours allowed for the units produced? Standard hours allowed are:
(d) If the labor quantity variance was $8,280 unfavorable, what were the actual direct labor hours worked? Actual hours worked:
(e) If the labor price variance was $11,869 favorable, what was the actual rate per hour? (Round answer to 2 decimal places, e.g. 2.75.) Actual rate per hour:
(f) If total budgeted manufacturing overhead was $367,847 at normal capacity, what was the predetermined overhead rate? (Round answer to 2 decimal places, e.g. 2.75.) Predetermined overhead rate:
(g) What was the standard cost per unit of product? (Round answer to 2 decimal places, e.g. 2.75.) Standard cost per unit:
(h) How much overhead was applied to production during the year? Overhead applied:
(i) Using one or more answers above, what were the total costs assigned to work in process? Total costs assigned:
Explanation / Answer
(a) Material Price variance = 2636 F = 131800 ( Std. Mat. price / pound - 0.91)
Standard materials price per pound: 0.93
(b) Material quantity variance = -15429 = 0.93 ( Std. Qty. - 131800) => Std. Quantity = 115209.7 pounds
Standard materials quantity per unit = 115209.70 / 28100 = 4.1 pounds per unit
(c) Standard hours allowed for units produced are: 28100 * 1.60 hours per unit = 44960 hours
(d) Labor quantity variance =- $8,280 = 12 (44960 - Actual hours worked)
Actual hours worked: 45650 hours
(e) Labor price variance = $11,869 = 28100 (12 - Actual rate /hour)
Actual rate per hour: $11.60 per hour
(f) Total budgeted manufacturing overhead =$367,847 (at normal capacity). Normal capacity was 50,390 direct labor hours.
Predetermined overhead rate: $367,847 / 50,390 = $7.30 per direct labor hour
(g) Standard cost per unit:Material cost + Labor costs + Overhead costs =
=( 4.1 pounds * 0.93) + ( 1.6 hours * 12) + (1.6 hours * $7.30) = $34.69 per unit
(h) Overhead applied: Actual hours worked * predetermined overhead rate = 45650 hours * $7.30 = $333245
(i) Total costs assigned:Material cost + Labor costs + Overhead costs = (131800 * 0.91) + (45650 * 11.60) + $333245 = $982723
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