Weather Aerodynamics, Inc., makes electronically equipped weather-detecting ball

ID: 2345092 • Letter: W

Question

Weather Aerodynamics, Inc., makes electronically equipped weather-detecting balloons for university meteorology departments. Because of recent nationwide inflation, the company's management has ordered that standard costs be recomputed. New direct materials price standards are $700 per set for electronic components and $14.00 per square meter for heavy-duty canvas. Direct materials quantity standards include one set of electronic components and 100 square meters of heavy-duty canvas per balloon. Direct labor time standards are 26 hours per balloon for the Electronics Department and 21 hours per balloon for the Assembly Department. Direct labor rate standards are $21 per hour for the Electronics Department and $18 per hour for the Assembly Department. Standard overhead rates are $16 per direct labor hour for the standard variable overhead rate and $12 per direct labor hour for the standard fixed overhead rate.

Using these production standards, compute the standard unit cost of one weather balloon.

Explanation / Answer

Direct materials:

cost

amount needed

cost for one balloon

electronic components

$700 per set

700

heavy duty canvas

$14 per square meter

100 square meters

1400

Direct labor:

Electronics Dept

$21 per hour

26 hours

546

Assembly Dept

$18 per hour

21 hours

378

Overhead

variable

$16 per DLH

752

fixed

$12 per DLH

564

total costs

4340

Answer: $4340