Kimm Company has gathered the following information about its product . Direct m
ID: 2457464 • Letter: K
Question
Kimm Company has gathered the following information about its product
. Direct materials: Each unit of product contains 4.50 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.50 pounds. Materials cost $5 per pound, but Kimm always takes the 2.00% cash discount all of its suppliers offer. Freight costs average $0.25 per pound.
Direct labor. Each unit requires 2.00 hours of labor. Setup, cleanup, and downtime average 0.30 hours per unit. The average hourly pay rate of Kimm’s employees is $12.00. Payroll taxes and fringe benefits are an additional $3.00 per hour.
Manufacturing overhead. Overhead is applied at a rate of $7.00 per direct labor hour.
Compute Kimm’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)
Total standard cost per unit $=
Explanation / Answer
Standard cost per unit = Material Cost + Freight Costs + Labour Cost + Manufacturing Overhead
= 24.50 + 1.25 + 34.50 + ($7.00 * 2.30)
= 24.50 + 1.25 + 34.50 + 16.10
= $76.35 per unit
Working:
1.Direct Material cost
Total Pound Require to produce 1 unit = 4.50 + 0.50 = 5 Pound
Cost of 5 Pound = 5 * $5 = $25.00
less: Cash Discount 2% = $00.50
Net Cost per unit = $24.50
2. Freight Cost
$0.25 * 5 Pound = $1.25
3. Labour Cost
Labour hour = 2 Hour
Setup, Cleaning and Downtime = 0.30 hours (i.e. not classified whether it is 30 minutes or 0.30 hours so 0.30 hours is taken)
Total Labour Hour = 2.30 hours
Hourly pay = $12.00 + Fringe benefits $3.00
Total Hourly pay = $15.00
Total Labour Cost = $15.00 * 2.30 hour = $34.50
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.