Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are: Material(8 kilograms × $5.00 per kilogram)$40.00 Labor(6 hours × $18.20 per hour) 109.20 All materials are added at the beginning of processing. The following data were taken from the company’s records for November: In-process beginning inventory NoneIn-process ending inventory 800units, 75% complete as to direct laborUnits completed 5,600unitsBudgeted output 6,000unitsPurchases of materials 50,000kilogramsTotal actual direct labor costs$600,000 Actual direct labor hours 36,500hoursMaterials usage variance$1,500UnfavorableTotal materials variance$750Unfavorable Required:1. Compute for November:a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)? b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)? c. The actual number of kilograms of material used in the production process during the month.

a. Direct Labor efficiency variance Direct Labor efficiency variance = (Standard hours for actual…

Answered: Dash Company adopted a standard costing…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 5P: High-End Products Inc. uses a standard cost system in accounting for the cost of production of its...

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Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are:


Material	(8 kilograms × $5.00 per kilogram)	$	40.00
Labor	(6 hours × $18.20 per hour)		109.20

All materials are added at the beginning of processing. The following data were taken from the company’s records for November:


In-process beginning inventory			None
In-process ending inventory		800	units, 75% complete as to direct labor
Units completed		5,600	units
Budgeted output		6,000	units
Purchases of materials		50,000	kilograms
Total actual direct labor costs	$	600,000
Actual direct labor hours		36,500	hours
Materials usage variance	$	1,500	Unfavorable
Total materials variance	$	750	Unfavorable

Required:

1. Compute for November:

a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)?

b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)?

c. The actual number of kilograms of material used in the production process during the month.

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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