Kansas Company uses a standard cost accounting system. In 2014, the company prod

Question

Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,600 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $11.00. Normal capacity was 50,230 direct labor hours. During the year, 131,600 pounds of raw materials were purchased at $0.95 per pound. All materials purchased were used during the year.

If the labor quantity variance was $5,170 unfavorable, what were the actual direct labor hours worked?

If the labor price variance was $6,695 favorable, what was the actual rate per hour?

If total budgeted manufacturing overhead was $366,679 at normal capacity, what was the predetermined overhead rate?

What was the standard cost per unit of product?

How much overhead was applied to production during the year?

Using one or more answers above, what were the total costs assigned to work in process?

Explanation / Answer

Answer 1 Labour Quantity variance = (Actual labour Hours - standard labour hours) * standard labour rate per hour Labour Quantity variance = $5170 UF Assume Actual Labour hours be = x Standard labour hours = 27600 units * 1.6 hour = 44160 hours standard labour rate per hour = $11 per hour 5170 = (x - 44160) * 11 5170 = 11x - 485760 11x = 490930 x = 44630 Actual direct Labour hours worked = 44630 hours Answer 2 labour price variance = (Actual labour rate per hour - standard labour rate per hour ) * Actual labour hours labour Price Variance = $6695 F Assume Actual labour rate per hour be = x standard labour rate per hour = $11 per hour Actual Labour hours = 44630 hours -6695 = (x - 11 ) * 44630 -6695 = 44630x - 490930 44630x = 484235 x = $10.85 per hour Actual labour rate per hour = $10.85 Answer 3 Budgeted manufacturing overheads = $366679 Normal capacity = 50230 direct labour hours Predetermined overhead rate = $366679 / 50230 hours = $7.30 per hour Answer 4 Raw material used during the year = 131600 pounds Expected production during the year = Actual labour hours / Hours required per unit of production = 44630 / 1.6 = 27894 units Raw material required per unit = 131600 / 27894 = 4.72 pound per unit Raw material cost per unit = 4.72 pound * $0.95 = $4.48 per unit Standard cost per unit = Direct material cost per unit + labour cost per unit + Overhead cost epr unit Standard cost per unit = $4.48 + (1.6*11) + (1.6*7.30) Standard cost per unit = $4.48 + $17.60 + $11.68 = $33.76 per unit Answer 5 Overhead applied to production during the year =44630 hours * $7.30 per hour = $325799 Answer 6 Expected production = 27894 units Actual production = 27600 units Balance units i.e.27894 - 27600 = 294 units are in process Cost assigned to work in process (only material & labour cost) = 294 units * ($4.48 per unit + $17.60 per unit)= $6492

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