Answered: Vitex, Inc. manufactures a popular…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...

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Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

Inputs	(1) Standard Quantity or Hours	(2) Standard Price or Rate	Standard Cost (1) × (2)
Direct materials	2.10	pounds	$	16.60	per pound	$	34.86
Direct labor	1.00	hours	$	15.90	per hour	$	15.90
Variable manufacturing overhead	1.00	hours	$	9.10	per hour	$	9.10
Total standard cost per unit						$	59.86

	Total	Variances Reported
	Standard Cost*	Price or Rate	Quantity or Efficiency
Direct materials	$	627,480	$	11,542	F	$	33,200	U
Direct labor	$	286,200	$	3,800	U	$	15,900	U
Variable manufacturing overhead	$	163,800	$	4,800	F	$	?^†	U

*Applied to Work in Process during the period.

The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

1. How many units were produced last period?

2. How many pounds of direct material were purchased and used in production?

3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

4. How many actual direct labor-hours were worked during the period?

5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)

6. How much actual variable manufacturing overhead cost was incurred during the period?

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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