Kansas Company uses a standard cost accounting system. In 2014, the company prod
ID: 2461783 • Letter: K
Question
Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,000 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,000 direct labor hours. During the year, 117,000 pounds of raw materials were purchased at $0.92 per pound. All materials purchased were used during the year.
a. If the materials price variance was $3,510 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.)
b. If the materials quantity variance was $4,750 unfavorable, what was the standard materials quantity per unit?(Round answer to 1 decimal places, e.g. 1.5.)
c. What were the standard hours allowed for the units produced?
d. If the labor quantity variance was $7,200 unfavorable, what were the actual direct labor hours worked?
e. If the labor price variance was $9,080 favorable, what was the actual rate per hour? (Round answer to 2 decimal places, e.g. 2.75.)
f. If total budgeted manufacturing overhead was $360,000 at normal capacity, what was the predetermined overhead rate? (Round answer to 2 decimal places, e.g. 2.75.)
g. What was the standard cost per unit of product? (Round answer to 2 decimal places, e.g. 2.75.)
h. How much overhead was applied to production during the year?
i. Using one or more answers above, what were the total costs assigned to work in process?
Explanation / Answer
a)Material price variance = AQ(AP-SP)
-3510 = 117000 (.92 -SP)
-3510 /117000 = .92 -SP
- .03 = .92 -SP
SP (Standard price = .92 +.03
= .95 per pound
b)Material quantity variance = SR (AQ-SQ)
4750 = .95 (117000 -SQ)
4750/ .95 = 117000 - SQ
5000 = 117000 -SQ
SQ (Standard quantity ) = 117000 - 5000
= 112000 pound
c)standars hours = 28000* 1.6 = 44800 hours
d)Labor quanity variance = SR (AH-SH)
7200 = 12 (AH -44800)
7200 /12 AH -44800
600 = AH - 44800
AH = 600 +44800
= 45400 Hours
E)Labor price variance = AH(AP-SP)
-9080 = 45400 (AP - 12)
-9080 /45400 = AP -12
- .2 = AP -12
AP = -.2 +12
= 11.8 Per hour
f)Overhead rate = overhead/estimated hours
= 360,000 / 50000
= $ 7.20 per hour
g)Standard cost = DM +DL +Overhead
Direct material :SQ per unit =112000/28000 = 4 per unit
= (.95 *4) +(1.6*12) +(7.2* 1.6)
= 3.8 + 19.2 + 11.52
= $ 34.52 per unit
h) Overhead applied = Actual hours *SR
= 45400 *7.2
= $ 326880
i)Cost assigned = Actual material +actual labore+overhead applied
= (117000*.92)+ (45400* 11.8)+ 326880
= $ 107640+ 535720+ 326880
= 970240
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