Question

Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.

The standard direct materials quantity per unit is

2.6 pounds.

2.7 pounds.

2.9 pounds.

3.0 pounds.

Answer 1

Materials required per unit	2.6
Add: Allowance for waste	0.3
Add: Spoilage per unit	0.1
Standard direct materials quantity per unit	3.0
Option 4 3.0 pounds is correct