Cumberland Furniture Company manufactures unfinished oak furniture. Cumberland uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining room table are as follows:
- Direct Labor: standard rate: $16/hr
- Standard time/unit: 1.8hr
- Direct materials (oak): Standard price: $12.50 per bd ft
- Standard qty: 17 bd ft
- Variable factory overhead: standard rate: $2.40 per direct labor hr
Fixed factory overhead: Standard rate: $1.10 per direct labor hr
a. Determine the standard cost per dining room table. If required, round your answer to two decimal places.
b. Why would Cumberland use a standard cost system?