Klash Company Adopted a Standard Cost System Several Years Ago

question 105

Essay

Klash Company adopted a standard cost system several years ago. The company uses standard costs for all of its inventories. The standard costs for direct materials and labor for its single product are as follows: Materials (12 kilograms/unit × $7.00/kilogram) = $84.00/unit; direct labor (8 hours/unit × $12.00/hour) = $96.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: Note: number of kilograms issued to production during the period = number of kilograms purchased.
Required:
1. Calculate the standard cost of the actual kilograms of material purchased.
2. Calculate the total standard kilograms for the production of the period (that is, for "equivalent units produced with respect to direct materials")
3. Calculate the total standard cost of materials for the production of the period.
4. Calculate the actual price per kilogram of material of material purchased this period.
5. Calculate the direct labor rate variance.

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Definitions:

Inventory Supplies

Items or materials kept on hand by a business for the production process or for sale.

Unearned Revenue

Money received by a business for goods or services yet to be provided, recorded as a liability until earned.

Liability Account

An accounting record that shows the current and future financial obligations a company owes to others.

Asset Account

An account on a company's balance sheet that represents a resource controlled by the company from which future economic benefits are expected.