Acer Inc produces and sells bagged sugar. Each bag contains 25 pounds of sugar.

Question

Acer Inc produces and sells bagged sugar. Each bag contains 25 pounds of sugar. The following information is provided by the company. Compute the standard unit cost per bag, show all calcuatlions: Direct materials quantity standard 25 pounds per unit (bag) Direct materials price standard $0.02 per pound Direct Labor time standard 0.6 hour per unit Direct labor rate standard $10.50 per hour Variable OH rate standard $1.75 per machine hour Fixed OH standard $1.25 per machine hour Machine hours standard 0.65 per unit Acer Inc produces and sells bagged sugar. Each bag contains 25 pounds of sugar. The following information is provided by the company. Compute the standard unit cost per bag, show all calcuatlions: Direct materials quantity standard 25 pounds per unit (bag) Direct materials price standard $0.02 per pound Direct Labor time standard 0.6 hour per unit Direct labor rate standard $10.50 per hour Variable OH rate standard $1.75 per machine hour Fixed OH standard $1.25 per machine hour Machine hours standard 0.65 per unit

Explanation / Answer

Computation of standard unit cost of a bag of sugar:

$ Direct material cost ( 25 x 0.02) 0.50 Direct labor cost (10.50 x 0.6) 6.3 Variable overhead (1.75 x 0.65) 1.1375 Fixed overhead(1.25 x 0.65) 0.8125 Total cost per unit 8.75

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