Atkinson Manufacturing produces ceramic teapots.

Atkinson allocates overhead based on the number of direct labor hours. The company is looking into using a standard cost system and has developed the following standards (one "unit" is a batch of

100 teapots):

Actual cost and operating data from the most recent month are as follows:

All manufacturing overhead is allocated on the basis of direct labor hours.

Read the requirements

LOADING...

.

Requirement 1. Calculate the standard cost of one batch.

Standard cost

Standard cost per batch

Direct materials

Direct labor

Variable MOH

Fixed MOH

DATA TABLE (Standards)

Standards:

Direct material 60 pounds per batch at $4.00 per pound

Direct labor 3.0 hours per batch at $16.00 per hour

Variable MOH standard rate $7.00 per direct labor hour

Predetermined fixed MOH standard rate $5.00 per direct labor hour

Total budgeted fixed MOH cost $1,550

DATA TABLE (Actual Result)

Purchased 4,900 pounds at a cost of $3.90 per pound

Used 4,500 pounds in producing 70 batches

Actual direct labor cost of $3,612 at an average direct labor cost per hour of $16.80

Actual variable MOH $1,570

Actual fixed MOH $1,650

REQUIRMENTS

1.	Calculate the standard cost of one batch.
2.	Calculate the following variances:
	a. The direct material variances.
	b. The direct labor variances.
	c. The variable manufacturing overhead variances.
	d. The fixed manufacturing overhead variances.
3.	Have the company's managers done a good job or a poor job controllingmaterials, labor, and overhead costs? Why or why not?
4.	Describe how the company's managers can benefit from the standard costing system. Do you think the company should continue with the standard costsystem?