Mama Fran\'s Bakery makes a variety of home-style cookies for upscale restaurant

Question

Mama Fran's Bakery makes a variety of home-style cookies for upscale restaurants in the Atlanta metropolitan area. The company's best-selling cookie is the double chocolate almond supreme. Mama Fran's recipe requires 10 ounces of a commercial cookie mix, 5 ounces of milk chocolate, and 1 ounce of almonds per pound of cookies. The standard direct materials costs are $0.80 per pound of cookie mix, $6 per pound of milk chocolate, and $20 per pound of almonds. The cookies require 1 minute of direct labor in the mixing department and 3 minutes of direct labor in the baking department. The standard labor rates in those departments are $16.60 per direct labor hour (DLH) and $27 per DLH, respectively. Variable overhead is applied at a rate of $39.90 per DLH; fixed overhead is applied at a rate of $60 per DLH.

Calculate the standard cost for a pound of Mama Fran's double chocolate almond supreme cookies. (Round answer to 2 decimal places, e.g. 3.51.)

Explanation / Answer

Calculation of Standard Cost:

Direct Material:

Particulars

Cost per pound i.e., Cost of 16 ounces

Ounces required

Cost

Cookie Mix

$0.80

10

$0.50 (0.80/16 * 10)

Milk Chocolate

$6

5

$1.875 (6/16 * 5)

Almonds

$20

1

$1.25 (20/16 * 1)

$3.625

Direct Labor:

Department

Rate per hour

Time Required

Cost

Mixing Department

$16.60

1 min

$0.45 (16.60/60 * 1)

Baking Department

$27

3 min

$1.35 (27/60 * 3)

$1.80

Variable Overhead:

Department

Rate per hour

Time Required

Cost

Mixing Department

$39.90

1 min

$0.665 (39.90/60 * 1)

Baking Department

$39.90

3 min

$1.995 (39.90/60 * 3)

$2.66

Direct Labor:

Department

Rate per hour

Time Required

Cost

Mixing Department

$60

1 min

$1 (60/60 * 1)

Baking Department

$60

3 min

$3 (60/60 * 3)

$4

Standard Cost for a pound of Double Chocolate Almond Supreme Cookies:

Particulars

Cost ($)

Direct Material

3.625

Direct Labor

1.80

Variable Overheads

2.66

Fixed Overheads

4

12.085

Standard Cost per pound = $12.08

Particulars

Cost per pound i.e., Cost of 16 ounces

Ounces required

Cost

Cookie Mix

$0.80

10

$0.50 (0.80/16 * 10)

Milk Chocolate

$6

5

$1.875 (6/16 * 5)

Almonds

$20

1

$1.25 (20/16 * 1)

$3.625

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