ABC Company\'s budgeted sales for June, July, and August are 12,000, 16,000, and

Question

ABC Company's budgeted sales for June, July, and August are 12,000, 16,000, and 14.000 units respectively. Each unit that ABC Company produces uses 3 pounds of raw material. ABC requires 25% of the next month's budgeted product on as raw material inventory each month ABC Company currently pays a standard rate of $1 per pound for raw materials. Each unit should be produced n 15 minutes of direct labor time at a standard direct labor rate of $12 per hour, Manufacturing overhead is applied at the standard rate of $16 per direct labor hour. Calculate the standard cost per unit for ABC Company

Explanation / Answer

Direct material     (3*1) 3 Direct labor      (12* 15 /60 ) 3 manufacturing overhead   (16* 15/60) 4 Total standard cost $ 10 per unit

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