Dobbs Company has gathered the information shown below about its product. Direct

Question

Dobbs Company has gathered the information shown below about its product. Direct materials: Each unit of product contains 4.5 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost $4 per pound, but Dobbs always takes the 2% cash discount all of its suppliers offer. Freight costs average $0.25 per pound. Direct labor: Each unit requires 2 hours of labor. Setup, cleanup, and downtime average 0.2 hours per unit. The average hourly pay rate of Dobbs's employees is $12. Payroll taxes and fringe benefits are an additional $3 per hour. Manufacturing overhead: Overhead is applied at a rate of $6 per direct labor hour. Compute Dobbs's total standard cost per unit.

Explanation / Answer

Cost/ unit = material+labor+overhead Material = (4.5 + 0.5) x 4 x 0.98 + 0.25 x (4.5 +0.5)=20.85 Labor = (2.0 + 0.2) x 12 + 3 x (2.0 + 0.2)=33 Overhead = (2.0 + 0.2) x 6=13.2 Cost/ unit = 20.85+33+13.2=67.05 Hope this helps

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