Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012,

Question

Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the company produced 28,000 units. Each unit took several pounds of direct materials and 1½ standard hours of direct labor at a standard hourly rate of $11.00. Normal capacity was 49,840 direct labor hours. During the year, 130,500 pounds of raw materials were purchased at $0.94 per pound. All materials purchased were used during the year.

(a) If the materials price variance was $5,220 favorable, what was the standard materials price per pound? ANSWER = $0.98

(b) If the materials quantity variance was $9,898 unfavorable, what was the standard materials quantity per unit? ANSWER = 4.3

(c) What were the standard hours allowed for the units produced? ANSWER = 42,000

(d) If the labor quantity variance was $7,370 unfavorable, what were the actual direct labor hours worked? ANSWER = 42,670

(e) If the labor price variance was $4,694 favorable, what was the actual rate per hour? ANSWER = $10.89

(f) If total budgeted manufacturing overhead was $358,848 at normal capacity, what was the predetermined overhead rate? ANSWER = $7.20

*** HAVING PROBLEMS WITH THE NEXT QUESTIONS ****

(g) What was the standard cost per unit of product?

(h) How much overhead was applied to production during the year?

(i) Using one or more answers above, what were the total costs assigned to work in process?

Explanation / Answer

Oklahoma Manufacturing Budgeted Direct labor hrs                  49,840 DLH/Unit                       1.50 Budgeted qty at normal capacity                  33,227 g Standard cost card Qty /Hr Rate Cost Direct Material                       4.30                  0.98                  4.21 Direct Labor                       1.50                11.00                16.50 Overhead                       1.50                  7.20                10.80 Total Standard cost              31.514 h Predetrmined OH rate per Direct Labor Hrs=7.2 Actual Direct Labor Hrs =                  42,670 Actual Overhead applied $     307,224.00 i Cost Assigned to WIP Cost to WIP Actual Qty /Hr Actual Rate/unit Actual Cost Direct Materials                130,500                  0.94           122,670 Direct Labor                  42,670                10.89           464,676 Overheads                  42,670                  7.20           307,224 Total cost assigned to WIP           894,570

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