STANDARD COSTING Osbourne Company produces Leather Jackets. The following Standa
ID: 2569362 • Letter: S
Question
STANDARD COSTING
Osbourne Company produces Leather Jackets. The following Standards for producing leather jackets have been established as follow:
1. Direct Materials (10 Leather Strips @ $20 Per Unit)
2. $200
3. Direct Labor (8 Hours @ $16 Per Hour)
4. 128
5. Total Standard Prime Cost Per Unit
6. $328
Osbourne Company produced 2,100 Leather Jackets during the current year. The actual Leather Strips purchased by Osbourne Company was 24,600 Leather Strips at $24 per Leather Strip. The total number of Leather Strips used during the current year was 21,600 Leather Strips. The actual Direct Labor for Osbourne Company for the current year was 15,200 hours at $18 per hour.
Required
Compute the two (2) Direct Materials Variances (ie. Direct Materials Price Variance and Direct Materials Quantity (Usage) Variance) and the Total Direct Materials Variance.
Compute the two (2) Direct Labor Variances (ie. Direct Labor Rate Variance and Direct Labor Efficiency Variance) and the Total Direct Labor Variance.
What are the advantages and disadvantages of a Standard Costing System?
INSERT THE REQUIRED ABOVE INFORMATION IN THE TEMPLATE PRESENTED BELOW.
1.
Actual Quantity Purchased
x
( AP
-
SP)
=
MPV
MPV
$
$
$
SP
x
(AQ - SQ)
SQ)
=
MQV
MQV
$
$
Total Direct Materials Variance =
$
2.
Actual Hours Worked
x
( AR
-
SR)
=
LRV
LRV
$
$
$
SR
x
(AH - SQ)
SH)
=
LEV
LEV
$
$
Total Direct Labor Variance =
$_________
_____
3.
1. Direct Materials (10 Leather Strips @ $20 Per Unit)
2. $200
3. Direct Labor (8 Hours @ $16 Per Hour)
4. 128
5. Total Standard Prime Cost Per Unit
6. $328
Explanation / Answer
Std qty required per unit of output 10 strips Actual output 2100 jackets Std Qty required for actual ouput (SQ) ( 2100*10) 21000 strips Std price per strip[ (SP) $ 20 per strip Actual Qty consumed (AQ ) 21,600 strips Actual price per strip (AP) $ 24 per strip Std abour Hour required per unit of output 8 hours Std Labour hours req for actual ouput (2100*8) (SH) 16,800 hours Std labour rate per hour (SR) $ 16 per hour Actual hours worked (AH) 15200 hours Actual rate per hour (AR) $ 18 per hour 1 MPV = AQ ( AP - SP) MPV = 21600 ( 24- 20 ) = 86400 Unfav MQV = SP (AQ - SQ ) MQV = 20 ( 21600-21000 ) = 12000 unfav TOTAL Material variance 98400 unfav 2 LRV = AH ( AR - SR ) LRV = 15200 ( 18-16) = 30400 unfav LEV = SR ( AH-SH) LEV = 16 (15200-16800) = 25600 Fav Total Labour variance 4800 Unfav
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