Kimm Company has gathered the following information about its product. Direct ma

Question

Kimm Company has gathered the following information about its product.

Direct materials: Each unit of product contains 4.30 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.90 pounds. Materials cost $2 per pound, but Kimm always takes the 1.27% cash discount all of its suppliers offer. Freight costs average $0.34 per pound.

Direct labor. Each unit requires 2.80 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Kimm%u2019s employees is $11.60. Payroll taxes and fringe benefits are an additional $2.30 per hour.

Manufacturing overhead. Overhead is applied at a rate of $4.40 per direct labor hour.

Compute Kimm%u2019s total standard cost per unit.

Explanation / Answer

standard cost for material = (4.3 + .90)*2 *0.9873 + (4.3+0.9) * 0.34 = $12.03

standard cost for labour = (2.8 + 0.2) *11.60 + (2.8+0.2) * 2.3 = $41.7

standard cost for manf overhead = (2.8+0.2) * 4.4=$13.2

total standard cost per unit = add all = $66.93

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