Question

RHO Company began its operations on January 1 and produces a single product that sells for $10.25 per unit. The standard capacity is 80,000 units per year. The 80,000 units were produced, and 70,000 units were sold during the year. Manufacturing costs and selling and administrative expenses follow:

Fixed Costs
Variable Costs
Raw materials--
$2.50 per unit produced
Direct labor
--
1.50 per unit produced
Factory overhead
$120,000
1.00 per unit produced
Selling and administrative
80,000
.50 per unit sold
What is the standard cost of manufacturing a unit of product?
a.$6.00
b.$6.50
c.$5.00
d.$5.50

Answer 1

Step-by-step explanation:

Direct material per unit produced = 2.50

Direct labor per unit produced = 1.50

Factory overhead:

Factory overhead - $120,000

80,000 units were produced

Fixed factory overhead = 120,000/80,000=1.5

Also, Factory variable overhead per unit produced = 1

Total factory overhead = (120000/80000+1) = 2.50

Standard cost of manufacturing a unit of product = 2.50+1.50+2.50 = 6.50