Kansas Company uses a standard cost accounting system. In 2014, the company prod
ID: 2470622 • Letter: K
Question
Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,900 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $11.00. Normal capacity was 50,330 direct labor hours. During the year, 132,000 pounds of raw materials were purchased at $0.90 per pound. All materials purchased were used during the year.
1. If the materials quantity variance was $3,331 unfavorable, what was the standard materials quantity per unit?
2. What were the standard hours allowed for the units produced?
3. If the labor quantity variance was $4,400 unfavorable, what were the actual direct labor hours worked?
4. If the labor price variance was $16,665 favorable, what was the actual rate per hour?
5. If total budgeted manufacturing overhead was $332,178 at normal capacity, what was the predetermined overhead rate?
6. What was the standard cost per unit of product?
7. How much overhead was applied to production during the year?
8. Using one or more answers above, what were the total costs assigned to work in process?
Explanation / Answer
1
Calculation of Standard Material Quantity per unit:
Given:
Material Quantity Variance = $ 3331 Unfavorable = 3331
Formula:
Material Quantity Variance = (Actual Quantity - Standard Qualtity) * Standard Price
Actual Quantity = 132000 Pounds
Standard Price Per Pound = $0.90
3331 = (132000- Standard Quantity ) * 0.90
3331 / 0.90 = 132000- Standard Quantity
3701.11 = 132000- Standard Quantity
Standard Quantity = 132000-3701.11 = 128298.89 Pounds
Standard Quantity Per unit = 128298.89 Pounds / 27900 Units = 4.60 Pounds Per Unit
2
Calculation of standard hours allowed for the units produced:
Formula :
Standard hours Allowed = Actual Units Produced * Standard hours per unit
Standard hours Allowed = 27900 Units * 1.60 hours
Standard hours Allowed = 44640 hours
3
Calculation of Actual Direct Labor Hours Worked:
Given :
Labor Quantity variance = $4400 Unfavorable = 4400
Formula :
Labor Quantity variance =(Actual Hours - Standard hours )* Standard Rate
Standard hours = 44640 Hours
Standard Rate = $11 Per Hour
4400 = (Actual hours - 44640) *11
400 = Actual hours - 44640
Actual hours Worked = 44640+400 = 45040 Hours
4
Calculation of actual rate per hour:
Given:
Labor Price Variance = $16665 Favorable = -16665
Formula :
Labor Price variance = (Actual Rate - Standard Rate ) * Actual hours
Standard Rate = $11 Per Hour
Actual Hours = 45040 hours
Hence,
-16665 = (Actual Rate - 11) *45040
-16665 / 45040 = Actual Rate - 11
- 0.37 = Actual Rate - 11
Actual Rate = 11-0.37 = $10.63 Per hour
1
Calculation of Standard Material Quantity per unit:
Given:
Material Quantity Variance = $ 3331 Unfavorable = 3331
Formula:
Material Quantity Variance = (Actual Quantity - Standard Qualtity) * Standard Price
Actual Quantity = 132000 Pounds
Standard Price Per Pound = $0.90
3331 = (132000- Standard Quantity ) * 0.90
3331 / 0.90 = 132000- Standard Quantity
3701.11 = 132000- Standard Quantity
Standard Quantity = 132000-3701.11 = 128298.89 Pounds
Standard Quantity Per unit = 128298.89 Pounds / 27900 Units = 4.60 Pounds Per Unit
2
Calculation of standard hours allowed for the units produced:
Formula :
Standard hours Allowed = Actual Units Produced * Standard hours per unit
Standard hours Allowed = 27900 Units * 1.60 hours
Standard hours Allowed = 44640 hours
3
Calculation of Actual Direct Labor Hours Worked:
Given :
Labor Quantity variance = $4400 Unfavorable = 4400
Formula :
Labor Quantity variance =(Actual Hours - Standard hours )* Standard Rate
Standard hours = 44640 Hours
Standard Rate = $11 Per Hour
4400 = (Actual hours - 44640) *11
400 = Actual hours - 44640
Actual hours Worked = 44640+400 = 45040 Hours
4
Calculation of actual rate per hour:
Given:
Labor Price Variance = $16665 Favorable = -16665
Formula :
Labor Price variance = (Actual Rate - Standard Rate ) * Actual hours
Standard Rate = $11 Per Hour
Actual Hours = 45040 hours
Hence,
-16665 = (Actual Rate - 11) *45040
-16665 / 45040 = Actual Rate - 11
- 0.37 = Actual Rate - 11
Actual Rate = 11-0.37 = $10.63 Per hour
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