Question

Stefani Company has gathered the following information about its product. Direct materials: Each unit of product contains 4.50 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.50 pounds. Materials cost $5 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 2.00 hours of labor. Setup, cleanup, and downtime average 0.40 hours per unit. The average hourly pay rate of Stefani’s employees is $12.00. Payroll taxes and fringe benefits are an additional $3.00 per hour. Manufacturing overhead. Overhead is applied at a rate of $7.00 per direct labor hour.

Answer 1

The right solution is "$78.55".

Step-by-step explanation:

The given values are:

Material cost,

= $5 per pound

Average freight costs,

= $0.25 per pound

Downtime average,

= 0.40 hours per unit

According to the question,

The direct material cost per unit will be:

=
`((4.5+0.5)* 5* 0.98)+(0.25* (4.5+0.5))`

=
`(5* 5* 0.98)+(0.25* 5)`

=
`24.5+1.25`

=
`25.75` ($)

The direct labor will be:

=
`((2.0+0.4)* 12)+(3* (2.0+0.4))`

=
`28.8+7.2`

=
`36` ($)

Manufacturing overhead will be:

=
`(2.0+0.4)* 7`

=
`2.4* 7`

=
`16.8` ($)

hence,

The standard cost per unit will be:

=
`Direct \ material+Direct \ labor+Manufacturing \ overhead`

=
`25.75+36+16.8`

=
`78.55` ($)