Kimm Company has gathered the following information about its product. Direct ma

Question

Kimm Company has gathered the following information about its product.

Direct materials: Each unit of product contains 3.00 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.30 pounds. Materials cost $2 per pound, but Kimm always takes the 1.29% cash discount all of its suppliers offer. Freight costs average $0.43 per pound.

Direct labor. Each unit requires 2.70 hours of labor. Setup, cleanup, and downtime average 0.19 hours per unit. The average hourly pay rate of Kimm%u2019s employees is $13.40. Payroll taxes and fringe benefits are an additional $2.80 per hour.

Manufacturing overhead. Overhead is applied at a rate of $4.30 per direct labor hour.

Compute Kimm%u2019s total standard cost per unit

Explanation / Answer

Direct materials cost = 3.3 * ( 2 * ( 1 - 0.0129 ) + 0.43 ) = 7.93386

Direct Labour = 2.89 * ( 13.4 + 2.8 ) = 46.818

Overhead = 2.89 * 4.3 = 12.427

Total standard cost = 7.93386 + 46.8181 + 12.427 = 67.17896, rouding its $67.18

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