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 3.40 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.60 pounds. Materials cost $5 per pound, but Stefani always takes the 4.00% cash discount all of its suppliers offer. Freight costs average $0.40 per pound. Direct labor. Each unit requires 1.00 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Stefani’s employees is $10.00. Payroll taxes and fringe benefits are an additional $3.90 per hour. Manufacturing overhead. Overhead is applied at a rate of $4.50 per direct labor hour. Compute Stefani’s total standard cost per unit.

Explanation / Answer

Direct material cost = Material used per unit * unit cost Direct material cost = (3.40+0.60)*(($5*96%)+$0.40) Direct material cost = $20.80 Per unit Direct Labour cost = Hours used per unit * hourly rate Direct Labour cost = (1+0.20) * ($10+$3.90) Direct Labour cost = $16.68 per unit Manufacturing overhead = Hours used per unit * hourly rate Manufacturing overhead = (1+0.20)*$4.50 Manufacturing overhead = $5.40 per unit Total standard cost = Direct material cost + Direct labour cost + Manufacturing overhead Total standard cost = $20.80 + $16.68 + $5.40 Total standard cost = $42.88 per unit

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.