In: Accounting
BatCo makes metal baseball bats. Each bat requires 2.00 kg of aluminum at $16 per kg and 0.35 direct labor hours at $18 per hour. Overhead is assigned at the rate of $32 per direct labor hour.
QS 23-5 Standard cost card LO C1
What amounts would appear on a standard cost card for BatCo?
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QS 23-6 Cost variances LO C2
Assume the actual cost to manufacture one metal bat is $55.50. Compute the cost variance and classify it as favorable or unfavorable.
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Solution :-
QS 23-5 Standard cost card LO C1
What amounts would appear on a standard cost card for BatCo?
Qty per Unit | Cost per Input | Std. Cost per Unit | |
Direct materials | 2.00 kg | $16 per kg |
= 2 * 16 = $32.00 |
Direct labor | 0.35 hours | $18 per hour |
= 0.35 * 18 = $6.3 |
Overhead | 0.35 hours | $32 per direct labor hour |
= 0.35 * 32 = $11.2 |
Total standard cost card for BatCo |
= $32.00 + $6.3 + $11.2 = $49.50 |
QS 23-6 Cost variances LO C2
Assume the actual cost to manufacture one metal bat is $55.50. Compute the cost variance and classify it as favorable or unfavorable.
Qty per Unit | Cost per Input | Std. Cost per Unit | |
Direct materials | 2.00 kg | 16 per kg |
= 2 * 16 = $32.00 |
Direct labor | 0.35 hours | $18 per hour |
= 0.35 * 18 = $6.3 |
Overhead | 0.35 hours | $32 per direct labor hour |
= 0.35 * 32 = $11.2 |
Total standard cost card for BatCo |
= $32.00 + $6.3 + $11.2 = $49.50 |
Direct in cost = Actual cost - standard cost
where,
Actual cost = $55.50
Standard cost = $49.50
Cost of variance = $55.50 - $49.50
= $6
Cost of variance = $6 ( unfavorable )