Stanton Company is planning to produce 2,000 units of product in 2012. Each unit

Question

Stanton Company is planning to produce 2,000 units of product in 2012. Each unit requires 2.20 pounds of materials at $7.00 per pound and a half-hour of labor at $13.40 per hour. The overhead rate is 60% of direct labor.

(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.

(b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.)

Direct materials $ Direct labor $ Overhead $ Stanton Company is planning to produce 2,000 units of product in 2012. Each unit requires 2.20 pounds of materials at $7.00 per pound and a half-hour of labor at $13.40 per hour. The overhead rate is 60% of direct labor. Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead. Compute the standard cost of one unit of product.

Explanation / Answer

a. Direct material=$2.2*7=15.4 per unit

Total Direct material=15.4*2000=30800

b. Direct labor=13.4/2=6.7 per unit

Total direct labor=6.7*2000=13400

c.overhead=13400*60%=8040

b.Standard cost=15.4+6.7+4.02=26.12 per unit

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