Question

Standard Product Cost

Sana Rosa Company manufactures unfinished 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	$22.00 per hr.
	standard time per unit	2 hrs.
Direct materials (oak):	standard price	$9.50 per bd. ft.
	standard quantity	18 bd. ft.
Variable factory overhead:	standard rate	$2.80 per direct labor hr.
Fixed factory overhead:	standard rate	$1.20 per direct labor hr.

a. Determine the standard cost per dining room table. If required, round your answer to two decimal places.
$per table

b. A standard cost system provides Sana Rosa management a cost control tool using the principle of  . Using this principle,   cost deviations from standards can be investigated and corrected.

Answer 1

a) Calculation of standard cost per dinning room table
Particulars				Amount
Direct labour per unit ($22*2hr)				$    44.00
Direct material per unit ($9.50*18)				$ 171.00
Variable factory overhead per unit (2.80*2hr)				$       5.60
Fixed manufacturing overhead per unit ($1.20*2hr)				$       2.40
Standard cost per dinning room table				$ 223.00
b) A standard cost system provides Rosa management a cost
control tool using the principle of cost control using this
principle, Major cost deviations from standard can be
investigated and corrected