Stefani Company has gathered the following information about its product. Direct

Question

Stefani Company has gathered the following information about its product.

Direct materials: Each unit of product contains 3.20 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.10 pounds. Materials cost $ 1 per pound, but Stefani always takes the 1.00 % cash discount all of its suppliers offer. Freight costs average $ 0.40 per pound.

Direct labor. Each unit requires 2.90 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Stefani’s employees is $ 10.20 . Payroll taxes and fringe benefits are an additional $ 3.70 per hour.

Manufacturing overhead. Overhead is applied at a rate of $ 4.90 per direct labor hour.

Compute Stefani’s total standard cost per unit. (Round intermediate calculations and final answer to 2 decimal places, e.g. 1.25.)

Explanation / Answer

Standard cost per unit Std material Quantity require per unit (3.20+0.10) 3.3 Std price per pound including fright (1-1% +0.40) 1.39 Std material cost per unit (3.3*1.39) 4.587 Std Labou cost per unit: Std labour hours (2.90+0.20) 3.1 Std labouor rate per hour including taxes (10.20+3.70) 13.9 Std labour cost per unit 43.09 Std Oh per unit (3.10 Std hours @4.90) 15.19 Std cost per unit 62.867

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