Standard Product Cost Sana Rosa Furniture Company manufactures designer home fur

Question

Standard Product Cost

Sana Rosa Furniture Company manufactures designer home furniture. Sana Rosa uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining room table are as follows:

a. Determine the standard cost per dining room table. If required, round your answer to two decimal places.
$___per table

b. A standard cost system provides Rosa Furniture management a cost control tool using the principle of____ . Using this principle,___ cost deviations from standards can be investigated and corrected.

Direct labor: standard rate $16.00 per hr. standard time per unit 3.00 hrs. Direct materials (oak): standard price $12.50 per bd. ft. standard quantity 19 bd. ft. Variable factory overhead: standard rate $2.80 per direct labor hr. Fixed factory overhead: standard rate $0.80 per direct labor hr.

Explanation / Answer

Answer a Determination of the standard cost per dining room table Per dining table Direct Material [ 19 bd ft. * $12.50 per bd. ft.] $237.50 Direct Labour [3 hours * $16.00 per hr.] $48.00 Variable factory overhead [3 hours * $2.80 per direct labor hr.] $8.40 Fixed factory overhead [3 hours * $0.80 per direct labor hr.] $2.40 Standard cost per dining room table $296.30 Answer b A standard cost system provides Rosa Furniture management a cost control tool using the principle of understand true cost. Using this principle, actual cost deviations from standards can be investigated and corrected.

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