Sergey Company has gathered the information shown below about its product. Direc

Question

Sergey Company has gathered the information shown below about its product. Direct materials: Each unit of product contains 4.80 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.50 pounds. Materials cost $2 per pound, but Sergey always takes the 1.53% cash discount all of its suppliers offer. Freight costs average $0.40 per pound. Direct labor: Each unit requires 1.80 hours of labor. Setup, cleanup, and downtime average 0.15 hours per unit. The average hourly pay rate of Sergey

Explanation / Answer

Hi, If you like my answer rate me lifesaver first...that way only I can earn points. Thanks for each unit Direct Material cost = (4.8 +0.5) * $2 * (1 - 1.53%) = $10.44 Freight Cost = (4.8 + 0.5) *0.40 = $2.12 Direct labor: Labor Cost = $12.20 * (1.8 + 0.15) =$23.79 Payroll taxes and fringe benefits = $3.30 * (1.8 + 0.15) = $6.44 Manufacturing overhead: Overhead =$7.80 * (1.8 + 0.15) = $15.21 Total cost = $15.21 + 6.44 + 23.79 +2.12 +10.44 = $58 per unit

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