Answered: Hickory Furniture Company manufactures…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2PB: Five Card Draw manufactures and sells 10,000 units of Aces, which retails for $200, and 8,000 units...

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

Direct labor: standard rate $18.00 per hour; standard time per unit 2.5 hours

Direct materials oak: standard price 9.50 per bd. ft; standard quantity 18 bd. ft.

Variable factory overhead: standard rate 2.80 per direct labor hour

Fixed factory overhead: standard rate 1.20 per direct labor hour

Determine the standard cost per dining room table. What is the total cost per unit?

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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