Question

Nosemer Company produces engine parts for large motors. The company uses a standard cost system for production costing and control. The standard cost sheet for one of its higher volume products (a valve), is as follows: Direct materials (5 lbs. @ $4.00) $20.00 Direct labor (1.4 hrs. @ $10.50) 14.70 Variable overhead (1.4 hrs. @ $6.00) 8.40 Fixed overhead (1.4 hrs. @ $3.00) 4.20 Standard unit cost $47.30 During the year, Nosemer experienced the following activity relative to the produc- tion of valves: a. Production of valves totaled 25,000 units. b. A total of 130,000 pounds of direct materials was purchased at $3.70 per pound. c. There were 10,000 pounds of direct materials in beginning inventory (carried at $4 per pound). There was no ending inventory. d. The company used 36,500 direct labor hours at a total cost of $392,375. e. Actual fixed overhead totaled $95,000. f. Actual variable overhead totaled $210,000. Nosemer produces all of its valves in a single plant. Normal activity is 22,500 units per year. Standard overhead rates are computed based on normal activity measured in standard direct labor hours.

Answer 1