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Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are...

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Accounting

Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not ideal at this point, but the management is working toward that as a goal. At present, the company uses the following standards.

Materials
Item Per unit Cost
Metal 1 lb. 63 per lb.
Plastic 12 oz. $1.00 per lb.
Rubber 4 oz. 88 per lb.
Direct labor
Item Per unit Cost
Labor 15 min. $8.00 per hr.
Predetermined overhead rate based on direct labor hours = $4.06

The January figures for purchasing, production, and labor are:

The company purchased 232,000 pounds of raw materials in January at a cost of 79 a pound.
Production used 232,000 pounds of raw materials to make 117,000 units in January.
Direct labor spent 18 minutes on each product at a cost of $7.90 per hour.
Overhead costs for January totaled $50,462 variable and $73,000 fixed.

Answer the following questions about standard costs.

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