Computing and Using Standard Costs Modular houses are Homes, Inc.\'s specialty.
ID: 2492510 • Letter: C
Question
Computing and Using Standard Costs Modular houses are Homes, Inc.'s specialty. The company's best-selling model is a three-bedroom, 1,400-square-foot house with an impressive front entrance. Last year, the standard costs for the six basic direct materials used in manufacturing the entrance were as follows: wood framing materials, $2,140; deluxe front door, $480; door hardware, $260; exterior siding, $710; electrical materials, $580; and interior finishing materials, $1,520. Three types of direct labor are used to build the entrance: carpenter, 30 hours at $36 per hour; door specialist, 4 hours at $24 per hour; and electrician, 8 hours at $50 per hour. Last year, the company used an overhead rate of 40 percent of total direct materials cost.
This year, the cost of wood framing materials is expected to increase by 20 percent, and a deluxe front door will cost $496. The cost of the door hardware will increase by 10 percent, and the cost of electrical materials will increase by 20 percent. Exterior siding cost should decrease by $15 per unit. The cost of interior finishing materials is expected to remain the same. The carpenter's wages will increase by $1 per hour, and the door specialist's wages should remain the same. The electrician's wages will increase by $0.50 per hour. Finally, the overhead rate will decrease to 30 percent of total direct materials cost.
1. Compute the total standard cost of direct materials per entrance for last year. $ per entrance
2. Using your answer to the previous requirement, compute the total standard unit cost per entrance for last year. $ per entrance
3. Compute the total standard unit cost per entrance for this year. (Round your answer to the nearest dollar.) $ per entrance
Explanation / Answer
Answer:1
Calculating Total standard cost of direct material:
Total standard cost of direct materials per entrance = Total standard cost of direct materials / No. of entrance
Total standard cost of direct materials per entrance = $5690 / 1 = $5690 per entrance
Therefore, the total standard cost of direct materials per entrance for last year is $5690 per entrance.
Answer:2
Total standard unit cost per entrance = Total standard unit cost / No. of entrance
Total standard unit cost per entrance = $9542 /1 = $9542 per entrance
Therefore, the total standard unit cost per entrance for last year is $9542 per entrance.
Explanation:
Overhead cost = Total standard cost for direct material * 40%
Overhead cost = $5690 * 40% = $2276
Answer: 3
Total standard unit cost per entrance = Total standard unit cost / No. of entrance
Total standard unit cost per entrance = $9749.30/1 = $9749 per entrance
Therefore, the total standard unit cost per entrance for last year is $9749 per entrance.
Explanation:
Computing cost of materials, labor and overhead for this year:
Direct materials:
Wood framing material ( 20% increase) : $2140*1.20 = $2568
Deluxe front door (given) = $496
Door hardware (10% increase) : $260*1.10 = $286
Electrical materials (20% increase) : $580 *1.20 = $696
Exterior siding ($15 per unit decrease) : $710 - $15 = $695
Interior finishing material (No change) = $1520
Direct labor:
Carpenter ($1 per hour increase): 30 hours * $37 per hour(36+1) = $1110
Door specialist wages (no change) :4 hours *$24 per hour = $96
Electrician ( $0.50 per hour increase): 8 hours * $ 50.50 per hour (50 + 0.50) = $404
Overhead:
Overhead cost is 30% of total standard cost for direct material.
Overhead = 30%* $ 6261 = $1878.30
Wood framing materials $ 2,140.00 Deluxe front door $ 480.00 Door hardware $ 260.00 Exterior siding $ 710.00 Electrical materials $ 580.00 Interior finishing materials $ 1,520.00 Total direct material standard cost $ 5,690.00Related Questions
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