Harmon Household Products, Inc., manufactures a number of consumer items for gen

Question

Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,100 chopping boards using 1,860 board feet of hardwood. The hardwood cost the company $12,276. The company’s standards for one chopping board are 0.54 board feet of hardwood, at a cost of $7.00 per board foot. Required: 1. According to the standards, what cost for wood should have been incurred to make 3,100 chopping blocks? How much greater or less is this than the cost that was incurred

Number of meals prepared Standard direct labor-hours per meal Total direct labor-hours allowed Standard direct labor cost per hour Total standard direct labor cost Actual cost incurred Standard direct labor cost Spending variance-unfavorableS 0 2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting F" for favorable, "U' for unfavorable and "None" for no effect (i.e., zero variance).) Labor rate variance Labor efficiency variance

Explanation / Answer

Standard Cost per Board Foot = 7.00

Standard Board foot per Cutting board = 0.54 Board foot

Therefore,

standard cost for 3100 boards = 3100 * .54 * 7 = $ 11718.00

Actual cost for 3100 board = $ 12276.00

Excess cost over standard= $ 558.00 or 558/3100 = $ 0.18 per board.

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