Styles Styles Osbourne Company produces Leather Jackets. The following Standards
ID: 2591058 • Letter: S
Question
Styles Styles Osbourne Company produces Leather Jackets. The following Standards for producing leather jackets have been established as follow Direct Materials (10 Leather Strips@ $20 Per Unit) Direct Labor (8 Hours$16 Per Hour) Total Standard Prime Cost Per Unit $200 128 328 Osbourne Company produced 2,100 Leather Jackets duringthe currentyear. actual Leather Strips purchased by Osbourne Company was 24,600 Leather Strips at $24 per Leather Strip. The total number of Leather Strips used during the current year was 21,600 Leather Strips. The actual Direct Labor for Osbourne Company for the current year was 15.200 hours at $18 per hour. Required 1. Compute the two (2) Direct Materials Variances (ie. Direct Materials Price Variance and Direct Materials Quantity (Usage) Variance) and the Total Direct Materials Variance. 2. Compute the two (2) Direct Labor Varlances (ie. Direct Labor Rate Variance and Direct Labor Efficlency Variance) and the Total Direct Labor Variance. 3. What are the advantages and disadvantages of a Standard Costing System?Explanation / Answer
3.
Five of the benefits that result from a business using a standard cost system are:
Three of the disadvantages that result from a business using standard costs are:
Actual Cost Std cost at Budgeted Meal Variance Particulars No of Units Per Unit Total No of Units Per Unit Total (Favourable)/ adverse Direct material 24,600 $ 24.00 $ 590,400 21,000 $ 20.00 $ 420,000 $ 170,400 Direct Labour 15,200 $ 18.00 $ 273,600 16,800 $ 16.00 $ 268,800 $ 4,800 Total $ 864,000 $ 688,800 $ 175,200