Question

Standard absorption cost per unit. A cost analyst for Stamper Manufacturing Co. has assembled the following data about the Model 24 stamp pad:
The piece of sheet metal from which eight pad cases can be made costs $0.14.
This amount is based on the number of sheets in a 3,000-pound bundle of sheet metal, which is the usual purchase quantity.
The foam pad that is put in the case costs $0.02, based on the number of pads that can be cut from a large roll of foam.
Production standards, based on engineering analysis recognizing attainable performance, provide for the manufacture of 1,800 pads by two workers in an eight-hour shift. The standard direct labor pay rate is $11 per hour.
Manufacturing overhead is applied to units produced using a predetermined overhead application rate of $16 per direct labor hour, of which $7 per hour is fixed manufacturing overhead.

Required:
a. Calculate the standard absorption cost of a package of 12 stamp pads.
b. Stamper Manufacturing Co.'s management is considering a special promotion that would result in increased sales of 2,000 packages of 12 pads per package.
Calculate the cost per package that is relevant for this analysis.



$1.99
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  • CreatedOctober 07, 2013
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