Answered: Sana Rosa Furniture Company…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 2E

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Question

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 $16.00 per hr

standard time per unit 3.50 hrs.

Direct materials (oak): standard price $11.50 per bd. ft.

standard quantity 17 bd. ft.

Variable factory overhead: standard rate $2.80 per direct labor hr.

Fixed factory overhead: standard rate $1.20 per direct labor hr.

Determine the standard cost per dining room table.

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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