Exercise 23-3 Kimm Company has gathered the following information about its prod

Question

Exercise 23-3

Kimm Company has gathered the following information about its product.

Direct materials. Each unit of product contains 4.60 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.40 pounds. Materials cost $3 per pound, but Kimm always takes the 2.63% cash discount all of its suppliers offer. Freight costs average $0.27 per pound.

Direct labor. Each unit requires 1.00 hours of labor. Setup, cleanup, and downtime average 0.19 hours per unit. The average hourly pay rate of Kimm’s employees is $13.30. Payroll taxes and fringe benefits are an additional $2.80 per hour.

Manufacturing overhead. Overhead is applied at a rate of $7.30 per direct labor hour.

Compute Kimm’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)

Explanation / Answer

1 Calculation of cost of direct material Direct Material 4.6 pounds per unit Wastage and Spoilage per unit 0.4 pounds per unit Total Material Required 5 pounds per unit Cost of Direct Material $3 per pound 15 (5 X $3 per pound) Less: Cash Discount ($15 X 2.63%)              0.39 Add: Freight Cost 0.27 Total Material cost for each unit            15.66 2 Calculation Of Direct labour cost : Direct labour 1 hour Setup, cleanup and downtime 0.19 hour Total time required for each unit 1.19 hour Cost of Direct labour per hour $13.30 Payroll taxes and fringe benefits per hour $2.80 $16.10 Total Direct Labour Cost(1.19hours X $16.10 ) $19.16 3 Manufacturing overhead (1.19hours X $7.30 ) $8.69 Total Standard cost per unit for Kimm's (1+2+3) = $15.66+$16.10+$8.69 = $43.51

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

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