Question - Widgets Express assembles widgets and uses flexible budgeting and a standard cost system. Overhead is allocated based on the number of direct materials parts. The performance report for Widgets Express includes the following information:
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Master
Budget
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Actual
Results
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Sales
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Budget: 10,000 widgets x $200
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$2,000,000
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Actual: 12,000 widgets x $220
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$2,640,000
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Variable manufacturing expenses:
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Direct materials
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Budget: 100,000 parts x $5.00
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500,000
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Actual: 120,000 parts x $4.50
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540,000
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Direct labor
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Budget: 20,000 hrs x $12.00
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240,000
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Actual: 22,500 hrs x $12.50
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281,250
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Variable overhead
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Budget: 100,000 parts x $2.00
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200,000
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Actual: 120,000 parts x $2.20
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264,000
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Fixed manufacturing expenses:
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Fixed overhead
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85,000
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100,000
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Total cost of goods sold
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1,025,000
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1,185,250
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Gross profit
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$975,000
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$1,454,750
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Calculate the total standard cost of one widget (include the fixed cost component).