Question

Stefani Company has gathered the following information about its product. Direct materials: Each unit of product contains 3.10 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.10 pounds. Materials cost $1 per pound, but Stefani always takes the 5.00% cash discount all of its suppliers offer. Freight costs average $0.30 per pound. Direct labor. Each unit requires 1.60 hours of labor. Setup, cleanup, and downtime average 0.10 hours per unit. The average hourly pay rate of Stefani's employees is $10.60. Payroll taxes and fringe benefits are an additional $3.10 per hour. Manufacturing overhead. Overhead is applied at a rate of $4.10 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 $

Answer 1

Working Note 1 Direct material per unit = 3.10 pounds Normal Loss = 0.10 pounds Total pound per unit = 3.20 pounds per unit Material cost per pound = $0.90 Fright cost per pound = $0.30 Total cost per pound =$1.20 Working Note 2 Normal labor hours per unit = 1.60 hours per unit Setup, Cleaning, Downtime = 0.10 Hours per unit Total = 1.70 hours per unit Average hourly rate - $ 10.60 per hours Payroll taxes and other = $3.10 per hours TOTAL = $ 13.70 per hours CALCULATION OF TOTAL STANDARD COST PER UNIT MATERIAL COST (3.20 Pounds x $ 1.20) $ 3.84 Labor cost ( 1.70 hours x $ 13.70 ) $23.29 Manufacturing overhead (1.70 hours $4.10) $6.97 Total standard Cost $34.10