**BE10.3 - Using Excel to Determine the Standard Cost of a Product****Problem:**SofTest Company produces a variety of wool rugs. Its most popular item is a small oval rug, suitable for placing in front of a door. After trying many different designs and processes, it landed on one style that requires both employee and processing time. SofTest allocates manufacturing overhead (MOH) based on machine hours. Information concerning the cost of one rug is presented here.| Cost Details | Amount ||---------------------------------------|---------|| Yards of wool required per rug | 15 || Minutes of employee time per rug | 15 || Minutes of processing time per rug | 30 || Estimated variable-MOH per hour | $3.00 || Estimated fixed-MOH per hour | $5.00 || Estimated cost of wool per yard | $1.20 || Estimated labor cost per hour | $15.00 |**Student Work Area:***Required*: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated.**Question: What is the standard cost of producing one oval rug?**| Expense Category | Calculation | |----------------------|-----------------|| Direct materials | || Direct labor | || Variable-MOH | || Fixed-MOH | || Total cost per rug | |(To complete this section, students should use the provided cost details and input the appropriate formulae to calculate each cost component. The total cost per rug will be the sum of all these components.)

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Description: **BE10.3 - Using Excel to Determine the Standard Cost of a Product****Problem:**SofTest Company produces a variety of wool rugs. Its most popular item is a small oval rug, suitable for placing in front of a door. After trying many different designs

Standard Costing: Standard costing is a system of accounting that uses predetermined standard…

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What is the standard cost of producing one oval rug? Direct materials Direct labor Variable-MOH Fixed-MOH Total cost per rug

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

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Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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**BE10.3 - Using Excel to Determine the Standard Cost of a Product**

**Problem:**

SofTest Company produces a variety of wool rugs. Its most popular item is a small oval rug, suitable for placing in front of a door. After trying many different designs and processes, it landed on one style that requires both employee and processing time. SofTest allocates manufacturing overhead (MOH) based on machine hours. Information concerning the cost of one rug is presented here.

| Cost Details | Amount |
|---------------------------------------|---------|
| Yards of wool required per rug | 15 |
| Minutes of employee time per rug | 15 |
| Minutes of processing time per rug | 30 |
| Estimated variable-MOH per hour | $3.00 |
| Estimated fixed-MOH per hour | $5.00 |
| Estimated cost of wool per yard | $1.20 |
| Estimated labor cost per hour | $15.00 |

**Student Work Area:**

*Required*: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated.

**Question: What is the standard cost of producing one oval rug?**

| Expense Category | Calculation |
|----------------------|-----------------|
| Direct materials | |
| Direct labor | |
| Variable-MOH | |
| Fixed-MOH | |
| Total cost per rug | |

(To complete this section, students should use the provided cost details and input the appropriate formulae to calculate each cost component. The total cost per rug will be the sum of all these components.)

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