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Ch 9 Homework

Ch 9 Homework - Demonstration Problem Chapter 9 Standard...

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1 Demonstration Problem: Chapter 9 Standard Costing S9.1 Ace Company produces components for truck motors and uses a standard cost system for product costing and control purposes. The standard cost sheet for manufacturing a widely used line of piston rods shows a standard cost of \$40.00 per piston rod with the following standard cost card. Direct materials (4 lbs @ \$3.40) \$13.60 Direct Labor (0.8 hours @ \$20 per hour) \$16.00 Variable Overhead (0.8 hours @ \$5 per hour) 4.00 Fixed Overhead (0.8 hours @\$ 8 per hour) 6.40 Total standard unit cost \$40.00 During the year Ace produced 70,000 piston rods and its accounting records show the following results: 1. Purchased 300,000 pounds of direct materials at an average cost of \$3.20 per pound. 2. There were 10,000 pounds of direct materials in beginning inventory carried on the books at the standard cost of \$3.40 per pound. 3. 306,000 pounds of direct materials were used in production. 4. 60,000 hours of direct labor were used in production at a cost of \$1,176,425 5. Actual manufacturing overhead costs for the year were \$642,500. These costs were analyzed into \$425,000 of fixed overhead and \$217,500 of variable overhead.

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