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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Problem 10-47Â Â Â Â Standard Costing
Botella Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The following standards for producing one case of bottles have been established:
Direct materials (4 lbs. @ $0.95)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $ 3.80
Direct labor (1.25 hours @ $15.00)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 18.75
Standard prime cost                                                        22.55
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During December, 78,000 pounds of material were purchased and used in production. There were 15,000 cases produced, with the following actual prime costs:
Direct materials                                            $ 74,000
Direct labor                                                  $315,000 (for 22,500 hrs.)
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Required:
1.      Compute the materials variances.
2.      Compute the labor variances.
3.      CONCEPTUAL CONNECTION What are the advantages and disadvantages that can result from the use of a standard costing system?
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