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	$18.00 per hr.
	standard time per unit	2 hrs.
Direct materials (oak):	standard price	$8.50 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. Determine the standard cost per dining room table

particular	Amount $
Direct labor Per unit (18x2)	36
Direct Material Per unit (8.50x18)	153
variable Factory Overhead per unit (2.8*2)	5.6
Fixed Factory Overhead per unit (1.20*2)	2.4
Standard cost per Dinning room table	197

b.

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