Johnsons Tobacco Company manufactures special metallic materials and decorative

Question

Johnsons Tobacco Company manufactures special metallic materials and decorative fittings for tobacco cans that require highly skilled labor. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: 2. Direct materials: 2 pound per unit, $24 per pound Direct labor: 8 hours per unit; $30 per hour Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the materials records showed that the company used 13,000 pounds of materials and actual total material costs were $182,000. For the purpose of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5,000 units.

Explanation / Answer

At the volume of 5000 units

standard direct materials cost = units*material required(pounds)* cost per pound

= 5000*2*24

= $240000

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