Answered: The Standard manufacturing corporation…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter5: Process Cost Accounting—general Procedures

Section: Chapter Questions

Problem 7E: The records of Stone Inc. reflect the following data: Work in process, beginning of month4,000 units...

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The Standard manufacturing corporation uses a standard cost system in accounting for the cost of its only product. The standard cost per unit( based on 10,000 units production) was set up as follows: Direct materials, 10 kgs @11/kg; Direct labor, 8 hours @50 per hour; Factory overhead,8 hours @ 15 per hour. The following data on the operations appear in the company's record for the month of July: Units completed during the month, 8,000 units; units in process at the end of the month, with 100% materials but half completed, 1,000 units; Direct materials used, 95,000 kgs @P10 per kg; Direct labor, P3,510,000 at a rate of P54; ACtual overhead for the month P985,000. Compute for the Variable efficiency variance. Indicate whether favorable or unfavorable.

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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