Problem 01 Custom Designs manufactures baby blankets by turning a client\'s phot

Question

Problem 01 Custom Designs manufactures baby blankets by turning a client's photograph of a new baby into a design printed on the blanket. This is a popular item, selling for $30, for new parents and grandparents. The following information has been provided by various units within Custom Design's departments. The company purchases fleece blankets in bundles of 100 at a price of $500 per bundle. Custom Design has to pay shipping charges of $10 per bundle. The process of transferring a picture onto a blanket costs $1.50. . Each blanket is boxed in a cardboard box that costs $0.25 each. It takes one worker 15 minutes to prepare a blanket and transfer the picture onto the blanket and another worker 5 minutes to check the shirt for flaws in the printing and packaging the blanket. Workers are paid $9 per hour. Custom Design applies overhead at a rate of 120% of direct labor cost. Required Compute the standard cost of producing one blanket.

Explanation / Answer

Calculation of standard cost of producing one blanket (Amounts in $)

Materials Cost: Purchase Price ($500/100 pieces) 5.00 Picture Transfer 1.50 Shipping Charges ($10/100 in one bundle) 0.10 Packaging cost 0.25 Labor Cost {$9 per hour*[(15 min+5 min)/60 min]} 3.00 Overhead Costs ($3.00*120%) 3.60 Standard Cost per blanket 13.45

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