Stanton Company is planning to produce 1,800 units of product in 2012. Each unit

Question

Stanton Company is planning to produce 1,800 units of product in 2012. Each unit requires 2.10 pounds of materials at $6.20 per pound and a half-hour of labor at $12.40 per hour. The overhead rate is 50% 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 1,800 units of product in 2012. Each unit requires 2.10 pounds of materials at $6.20 per pound and a half-hour of labor at $12.40 per hour. The overhead rate is 50% 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. (Round answer to 2 decimal places, e.g. 2.75.)

Explanation / Answer

a)Direct material = 1800 units * 2.1 pound pe unit * 6.2 per pound = $23436

Direct labor = 1800*.5 *12.4   = $ 11160

Overhead = 11160 *.50 = $ 5580

b)Standard cost :

Direct material (2.1**6.2)      = 13.02

Direct labor      (.5* 12.40)    =    6.20

overhead          (6.20* .50)    =   3.10

Standard cost of 1 unit        = 22.32

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