1 answer

Stefani Company has gathered the following information about its product. Direct materials: Each unit of product...

Question:

Stefani Company has gathered the following information about its product. Direct materials: Each unit of product contains 3.4

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 $2 per pound, but Stefani always takes the 2.00% cash discount all of its suppliers offer. Freight costs average $0.25 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 $12.70. Payroll taxes and fringe benefits are an additional $2.00 per hour. Manufacturing overhead. Overhead is applied at a rate of $6.40 per direct labor hour. Compute Stefani's total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.) Total standard cost per unit

Answers

CALCULATION OF STANDARD COST PER UNIT
Direct Material (3.40 Pounds + 0.60 Pounds) 4 Pounds
Price per pound $2.00
Total Material Cost $8.00
Less: Discount 2% -$0.16
Add: Freight Cost 0.25 per Pound X 4 pound $1.00
$8.84
Direct Labor :
Total Labor Hors = 1.00 + 0.20 Downtime = 1.20 Hrs
Avg. Hrly rate $12.70
$15.24
Payroll taxes anf fringe benefits($ 2.00 X 1.20) $2.40
$17.64
Manufacturing overhead :
1.20 Hours X $ 6.40 $7.68
Total Standard Cost $34.16
Answer = Standard Cost = $ 34.16
.

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