Materials required for each unit = 4.20 + 0.10 = 4.30 pounds Normal materials co
ID: 373718 • Letter: M
Question
Materials required for each unit = 4.20 + 0.10 = 4.30 pounds
Normal materials cost per unit = Materials required * cost per unit = 4.30 *$4 = $17.2
Materials cost per unit after discount = $17.2 *(1-2.39%) =$16.79
Freight cost per unit = 4.30 *$0.27 = $1.16
Total material cost per unit = Materials cost per unit after discount + Freight cost per unit
= $16.79 +$1.16 = $17.95
Direct labor hours per unit =2.70 + 0.20 = 2.90 hours
Labor rate per hour = $11.80 +$2.80 = $14.60
Total labor cost per unit = Direct labor hours per unit * Labor rate per hour
= 2.90 hours * $14.60 = $42.34
Manufacturing overhead per unit = Direct labor hours per unit *$5.90
= 2.90 hours*$5.90 = $17.11 per unit
Now,
Total Standard cost per unit = Total material cost per unit + Total labor cost per unit + Manufacturing overhead per unit
= $17.95+ $42.34 + $17.11 = $77.40 per unit
Explanation / Answer
Kimm Company has gathered the following information about its product.
Direct materials. Each unit of product contains 4.20 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.10 pounds. Materials cost $4 per pound, but Kimm always takes the 2.39% cash discount all of its suppliers offer. Freight costs average $0.27 per pound.
Direct labor. Each unit requires 2.70 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Kimm’s employees is $11.80. Payroll taxes and fringe benefits are an additional $2.80 per hour.
Manufacturing overhead. Overhead is applied at a rate of $5.90 per direct labor hour.
Compute Kimm’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)