Exercise 23-3 Kimm Company has gathered the following information about its prod
ID: 2448840 • Letter: E
Question
Exercise 23-3
Kimm Company has gathered the following information about its product.
Direct materials. Each unit of product contains 4.20 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.30 pounds. Materials cost $4 per pound, but Kimm always takes the 2.85% cash discount all of its suppliers offer. Freight costs average $0.39 per pound.
Direct labor. Each unit requires 1.60 hours of labor. Setup, cleanup, and downtime average 0.12 hours per unit. The average hourly pay rate of Kimm’s employees is $11.50. Payroll taxes and fringe benefits are an additional $2.40 per hour.
Manufacturing overhead. Overhead is applied at a rate of $6.60 per direct labor hour.
Compute Kimm’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)
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Total standard cost per unit $Explanation / Answer
Statement showing computation of standard cost per unit Particulars Amount Direct Materials Cost per unit 19.24 Direct Labour Cost per unit 23.91 Manu O/H Cost per unit 11.35 Total Standard cost per unit 54.50 Pound contained per unit 4.20 Normal Wastage 0.30 Total pound reqd per unit 4.50 Cost per pound(4*(1-.0285) +.39) 4.28 Mat Cost per unit 19.24 Hours reqd per unit0 1.60 Normal wastage 0.12 Total hrs reqd per unit 1.72 Cost per hour(11.50 +2.40) 13.90 Total Labour cost per unit 23.91 O/H cost per Lab Hour 6.60 Total hrs reqd per unit 1.72 O/H cost per unit 11.35
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