Kansas Company uses a standard cost accounting system. In 2014, the company prod
ID: 2467348 • Letter: K
Question
Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,300 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,580 direct labor hours. During the year, 131,000 pounds of raw materials were purchased at $0.93 per pound. All materials purchased were used during the year.
1.If the materials quantity variance was $6,156 unfavorable, what was the standard materials quantity per unit? (Round answer to 1 decimal places, e.g. 1.5.) Standard materials quantity per unit
2.What were the standard hours allowed for the units produced?
3.If the labor quantity variance was $8,840 unfavorable, what were the actual direct labor hours worked?
4.If the labor price variance was $17,465 favorable, what was the actual rate per hour? (Round answer to 2 decimal places, e.g. 2.75.)
5.What was the standard cost per unit of product? (Round answer to 2 decimal places, e.g. 2.75.)
6.How much overhead was applied to production during the year?
7. Using one or more answers above, what were the total costs assigned to work in process?
Explanation / Answer
Answer:
1) Material Price variance = (actual price – standard price)) x Actual quantity used = $2620 F
=> (0.93 – SP) x 131000 = -2620
=> 0.93 – SP = -2620 / 131000
=> 0.93 – SP = - 0.02
=> SP = 0.93+0.02 = $0.95/pound
Material Quantity variance
= (Actual Quantity Used – standard Quantity for actual production) x Standard price per unit of raw material
= (131000 – Standard quantity required per unit x actual production) x $0.95
By question,
Material quantity variance = $6156 U
Therefore,
(131000 – SQ x 28300) = 6156
=> SQ = (131000 – 6156) / 28300 = 4.4 pounds per unit
2) standard hours allowed for the units produced = 1.6 direct labour hours
3)
Labour quantity variance = $8840 U
=> (actual hours used – standard hours for actual production) x Standard labour rate = 8840
=> (actual hours used – 1.6 hours/unit x 28300 units) x $13/hour = 8840
=> (actual hours used – 45280) x 16 = 8840
=> actual hours used = 45280 + (8840/16) = 45832.5 hours
4) labor price variance was $17,465 favorable
=> (actual labour rate – standard labour rate) x actual labour hours used = -$17465
=> (actual labour rate per hour - $13/hour) x 45832.5 hours = -$17465
=> (actual labour rate per hour = 13 + (17465/45832.5) = $13.38 per hour
5)
Standard cost per unit of the product = standard material cost per unit + standard labour cost per unit = $0.95/pound x 4.4 pounds per unit + 1.6 hours x $13/hour = $24.98 per unit
6)
Predetermined overhead rate = budgeted overhead / normal capacity = $342102 / 49580 hours = $6.9/direct labour hour
Overhead applied = actual labour hour used x Predetermined overhead rate = 45832.5 hours x $6.9 / hour = $316244.25
7)
Total cost assigned to work in progress = (total direct material cost + total labour cost) + overhead applied = Total direct variable cost per unit x 28300 units + $316244.25 = $24.98 x 28300 + $316244.25 = $1023178.25
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