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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:
Master Budget
Actual Results
Sales
Budget: 10,000 widgets x $200
$2,000,000
Actual: 12,000 widgets x $220
$2,640,000
Variable manufacturing expenses:
Direct materials
Budget: 100,000 parts x $5.00
500,000
Actual: 120,000 parts x $4.50
540,000
Direct labor
Budget: 20,000 hrs x $12.00
240,000
Actual: 22,500 hrs x $12.50
281,250
Variable overhead
Budget: 100,000 parts x $2.00
200,000
Actual: 120,000 parts x $2.20
264,000
Fixed manufacturing expenses:
Fixed overhead
85,000
100,000
Total cost of goods sold
1,025,000
1,185,250
Gross profit
$975,000
$1,454,750
Calculate the total standard cost of one widget (include the fixed cost component).
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