Standard Product CostAtlas Furniture Company manufactures designer home furniture. Atlas 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$24.00 per hr. standard time per unit4 hrs.Direct materials (oak):standard price$12.00 per bd. ft. standard quantity19 bd. ft.Variable factory overhead:standard rate$2.80 per direct labor hr.Fixed factory overhead:standard rate$0.80 per direct labor hr.a. Determine the standard cost per dining room table. If required, round your answer to two decimal places.$ per tableb. A standard cost system provides Atlas Furniture Company’s management a cost control tool using the principle of . Using this principle, cost deviations from standards can be investigated and corrected.

Answered: Standard Product Cost Atlas Furniture…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Standard Product Cost

Atlas Furniture Company manufactures designer home furniture. Atlas 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	$24.00 per hr.
	standard time per unit	4 hrs.
Direct materials (oak):	standard price	$12.00 per bd. ft.
	standard quantity	19 bd. ft.
Variable factory overhead:	standard rate	$2.80 per direct labor hr.
Fixed factory overhead:	standard rate	$0.80 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 Atlas Furniture Company’s management a cost control tool using the principle of . Using this principle, cost deviations from standards can be investigated and corrected.

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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