Question

Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (4,100 bars) are as follows:

Ingredient	Quantity		Price
Cocoa	630	lbs.	$0.40		per lb.
Sugar	180	lbs.	$0.60		per lb.
Milk	150	gal.	$1.70		per gal.

Determine the standard direct materials cost per bar of chocolate. If required, round to the nearest cent.
$per bar

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	$20.00 per hr.
	standard time per unit	3.5 hrs.
Direct materials (oak):	standard price	$9.50 per bd. ft.
	standard quantity	16 bd. ft.
Variable factory overhead:	standard rate	$2.40 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

Answer

1)

cocoa: 630*.40 = 252

sugar: 180*.60 = 108

milk: 150*1.70 = 255

costs for one batch (4100): 252 + 108 + 255 = 615

there are 4100 bars per batch:

615 / 4100 bars = .15

answer: $0.15 per bar

2) Standard rate per dining room table = (Direct material+ Direct labour + variable factory overhead + fixed factory overhead ) = ((20*3.5)+(9.5*16)+(3.5*2.4)+(3.5*1.2)) = $ 234.6 It is suggested to use standard cost method as it gives a bench marking price for the product which is ideally based on normal capacity.