Siggy Inc. budgeted 12,000 and produced 11,000 tape dispensers during June. Resin used to make the dispensers is purchased by the pound. Manufacturing overhead is applied based on units produced. Manufacturing standards and actual costs follow:
$\begin{array}{|l|c|c|}
\hline &\text { Standards }&\text { Actual }\
\hline \text { Materials } & 2 \text { pounds @ } \$ 5.00 \text { a pound } & 20,900 \text { pounds } @ \$ 4.90 \text { per pound } \
\hline \text { Labor } & 0.25 \text { hours } @ \$ 15.00 \text { per hour } & 2,700 \text { hours } @ \$ 15.30 \text { per hour } \
\hline \text { Variable overhead } & \$ 39,000 & \$ 36,500 \
\hline \text { Fixed overhead } & \$ 1.50 \text { per dispenser } & \$ 17,250\\hline
\end{array}$
How much is the standard cost of a tape dispenser?

Question

Siggy Inc. budgeted 12,000 and produced 11,000 tape dispensers during June. Resin used to make the dispensers is purchased by the pound. Manufacturing overhead is applied based on units produced. Manufacturing standards and actual costs follow:
$\begin{array}{|l|c|c|}
\hline &\text { Standards }&\text { Actual }\
 \hline \text { Materials } & 2 \text { pounds @ } \$ 5.00 \text { a pound } & 20,900 \text { pounds } @ \$ 4.90 \text { per pound } \
\hline \text { Labor } & 0.25 \text { hours } @ \$ 15.00 \text { per hour } & 2,700 \text { hours } @ \$ 15.30 \text { per hour } \
\hline \text { Variable overhead } & \$ 39,000 & \$ 36,500 \
\hline \text { Fixed overhead } & \$ 1.50 \text { per dispenser } & \$ 17,250\\hline
\end{array}$
How much is the standard cost of a tape dispenser?

Quizplus · Accepted Answer

The standard cost of a tape dispenser is $18.50. This is calculated by multiplying the standard quantity of materials used (2 pounds) by the standard price per pound ($5.00), adding the standard labor cost (0.25 hours * $15.00 per hour), and adding the standard variable overhead cost ($39,000 / 12,000 dispensers). The fixed overhead cost is not included in the standard cost because it is not variable with the level of production.

Siggy Inc Budgeted 12,000 and Produced 11,000 Tape Dispensers During June