New Jersey Valve Company manufactured 7,800 units during January of a control va

Question

New Jersey Valve Company manufactured 7,800 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following:

The control valve has the following standard prime costs:

Required:

Prepare a schedule of standard production costs for January, based on actual production of 7,800 units.

For the month of January, compute the following variances.

Direct labor 40,200 hr. at $14.60 per hr. Direct material purchased 30,000 lb. at $3.00 per lb. Direct material used 22,100 lb.

Explanation / Answer

Schedule of Standard Production Costs Direct material (7,800 X 3 X $2.90) $67,860 Direct labor (7,800 X 5 X $15.10) $588,900 Standard prime cost $656,760

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