Computing Standard Costs Flossmoor Corporation uses standard costing and is in t

Question

Computing Standard Costs Flossmoor

Corporation uses standard costing and is in the process of updating its direct materials and direct labor standards for Product 2B. The following data have been accumulated:

Direct materials In the previous period, 20,000 units were produced, and 32,000 square yards of direct materials at a cost of $128,000 were used to produce them.

Direct labor In the previous period, 20,000 units were produced and 58,000 direct labor hours were worked - 34,000 hours on machine H and 24,000 hours on machine K. Machine H operators earned $10 per hour, and machine K operators earned $9 per hour last period. A new labor union contract calls for a 10 percent increase in labor rates for the coming period.

Using this information as the basis for the new standards, compute the direct materials quantity and price standards. If required, round your answers to two decimal places.

Direct materials quantity standard sq. yds. per unit

Direct materials price standards $ per sq. yd.

Compute the direct labor time and rate standards for each machine for the coming accounting period. If required, round your answers to two decimal places.

Direct labor time standards Direct labor rate standards

Machine H ?? direct labor hours per unit $ ?? per hour

Machine K ?? direct labor hours per unit $ ?? per hour

Explanation / Answer

Ans) Direct Material

      Units produced = 20000units

        No of square yards used to produce 20000 units = 32000 sq yds

        Cost Incurred to produce 20000 units = $1,28,000

        Direct materials quantity standards sq.yds.per.unit = 32,000 / 20,000 = 1.6

        Direct materials price standards $ per sq. yd = 1,28,000 / 32,000 = 4

        Direct labour

        Direct labour hrs used to produce 20,000 units

        Machine H = 34,000hrs

        Machine K = 24,000hrs

        Machine H - Direct labour hours per unit = 34,000 / 20,000 = 1.7

        Machine K - Direct labour hours per unit = 24,000 / 20,000 = 1.2

        In last period

      So in coming period

      Machine H operators earn = $10 + $10*10% = 10 + 1 = $11 per hour

      Machine K operators earn = $9 + $9*10% = 9 + 0.9 = $9.9 per hour

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