Answered: Abbeville Fixture Company manufactures…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 46E: Refer to the information for Cinturon Corporation on the previous page. Required: 1. Break down the...

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Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Standard wage per hr.	$15.00
Standard labor time per faucet	40 min.
Standard number of lbs. of brass	3 lbs.
Standard price per lb. of brass	$2.40
Actual price per lb. of brass	$2.50
Actual lbs. of brass used during the week	14,350 lbs.
Number of faucets produced during the week	4,800
Actual wage per hr.	$14.40
Actual hrs. for the week (90 employees × 36 hours)	3,240 hrs.

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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