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Unformatted text preview: E11-1B Baffet Company is planning to produce 2,000 units of product in 2011. Each unit requires 2.5 pounds of materials at $5 per pound and a half hour of labor at $16 per hour. The overhead rate is 70% of direct labor. Instructions (a) Compute the budgeted amounts for 2011 for direct materials to be used, direct labor, and applied overhead. (b) Compute the standard cost of one unit of product. (c) What are the potential advantages to a corporation of using standard costs? E11-2B Victor Pallini manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,300 ounces of grape concentrate at $0.08 per ounce 54 pounds of granulated sugar at $0.30 per pound 60 lemons at $0.66 each 50 yeast tablets at $0.25 each 50 nutrient tablets at $0.20 each 2,500 ounces of water at $0.004 per ounce Victor estimates that 4% of the grape concentrate is wasted, 10% of the sugar is lost, and 20% of the lemons cannot be used. Instructions Compute the standard cost of the ingredients for one gallon of wine. (Carry computa- tions to two decimal places.) E11-3B Melman Company has gathered the information shown below about its product. Direct materials: Each unit of product contains 4.5 pounds of materials. The aver- age waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost $3 per pound, but Melman always takes the 1% cash discount all of its suppliers offer. Freight costs average $0.25 per pound. Direct labor: Each unit requires 2 hours of labor. Setup, cleanup, and downtime average 0.2 hours per unit. The average hourly pay rate of Melman’s employees is $10. Payroll taxes and fringe benfits are an additional $3 per hour. Manufacturing overhead: Overhead is applied at a rate of $6 per direct labor hour. Instructions Compute Melman’s total standard cost per unit. E11-4B Phast Repair Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the oil change .9 hour Hourly wage rate $12 Payroll taxes 12% of wage rate Setup and downtime 10% of actual labor time Cleanup and rest periods 30% of actual labor time Fringe benefits 25% of wage rate Instructions (a) Determine the standard direct labor hours per oil change. (b) Determine the standard direct labor hourly rate. (c) Determine the standard direct labor cost per oil change. (d) If an oil change took 1.3 hours at the standard hourly rate, what was the direct labor quantity variance? E11-5B The standard cost of Product B manufactured by Hajj Company includes two units of direct materials at $4.00 per unit. During June, 27,000 units of direct materials are purchased at a cost of $3.80 per unit, and 27,000 units of direct materials are used to produce 13,000 units of Product B....
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- Fall '10
- Cost Accounting, Standard Hours