Question

Mama Fran's Bakery makes a variety of home-style cookies for upscale restaurants in the Atlanta metropolitan area. The company's best-selling cookie is the double chocolate almond supreme. Mama Fran's recipe requires 10 ounces of a commercial cookie mix, 5 ounces of milk chocolate, and 1 ounce of almonds per pound of cookies. The standard direct materials costs are $0.80 per pound of cookie mix, $4.00 per pound of milk chocolate, and $12.00 per pound of almonds. Each pound of cookies requires 1 minute of direct labor in the mixing department and 2 minutes of direct labor in the baking department. The standard labor rates in those departments are $14.40 per direct labor hour (DLH) and $18.00 per DLH, respectively. Variable overhead is applied at a rate of $32.40 per DLH; fixed overhead is applied at a rate of $60.00 per DLH. Calculate the standard cost for a pound of Mama Fran's double chocolate almond supreme cookies?

Answer 1

Standard cost per pound= $34.21

Step-by-step explanation:

The standard cost is the sum of direct material, direct labor, and total overhead. We will calculate each separate.

Direct material:

10 ounces cookie mix for $0.80= $8

5 ounces of milk chocolate for $4= $20

1 ounce of almonds for $12 the pound= $0.75

1 pound= 16 ounces

1 ounce= 0.0625*$12= $0.75

Direct labor:

1 minute in the mixing department

2 minutes in the baking department.

Mixing= $14.40* (1/60)= $0.24

Baking= $18*(2/60)= $0.6

Overhead:

Variable overhead is applied at a rate of $32.40 per DLH

Fixed overhead is applied at a rate of $60.00 per DLH.

Variable= 32.40 * (3/60)= $1.62

Fixed= 60* (3/60)= $3

Standard cost per pound= (8 + 20 + 0.75) + (0.24 + 0.6) + (1.62 + 3)= $34.21