   Chapter 23, Problem 23.2EX

Chapter
Section
Textbook Problem

Standard product cost Sana Rosa Furniture Company manufactures designer home furniture. Sana Rosa 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 $18.00 per hr. standard time per unit 3.5 hrs. Direct materials (oak): standard price$ 15.00 per bd. ft.   standard quantity 26 bd. ft Variable factory overhead: standard rate $4.20 per direct labor hr. Fixed factory overhead: standard rate$1.80 per direct labor hr.  a.    Determine the standard cost per dining room table. b.    Why would Sana Rosa Furniture Company use a standard cost system?

(a)

To determine

Standard cost:

In the accounting records, the term standard cost refers to the practice of replacement of an expected cost for an actual cost. Then the difference between the expected costs and actual costs showing the variance are also recorded periodically. A standard costs is also known as target cost or predetermined cost.

Standard cost system:

Standard cost system to the accounting systems which use standards for product cost. Standard cost system enable management to determine the following:

• How much a product should cost (standard costs).
• How much actually does it cost (actual cost).

To determine: The standard cost per dining room table.

Explanation

The total cost per unit is ($63 +$390 + $14.70 +$6.30) $474. Working notes: To determine the direct labor cost: Direct labor =Standard rate × standard time per unit=$18.00 × 3.5 hrs=$63 To determine the direct material cost: Direct material =Standard price × standard quantity=$15.00 × 26 bd

(b)

To determine

To explain: The reason behind the use of standard cost system by Company S.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Which one is best?

Foundations of Business (MindTap Course List)

What is a context diagram?

Pkg Acc Infor Systems MS VISIO CD

Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs and externa...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List) 