Muhsin Company has gathered the information shown on the next page about its product. Direct materials: Each unit of product
Direct materials: Each unit of product contains 4.5 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost $4 per pound, but Muhsin always takes the 2% cash discount all of its suppliers offer. Freight costs average $0.25 per pound.
Direct labor: Each unit requires 2 hours of labor. Setup, cleanup, and downtime average 0.2 hours per unit. The average hourly pay rate of Muhsin’s employees is $12. Payroll taxes and fringe benfits are an additional $3 per hour.
Manufacturing overhead: Overhead is applied at a rate of $6 per direct labor hour.
Compute Muhsin’s total standard cost per unit.
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Step by Step Answer:
Chapter # 25- Standard Costs and Balanced Scorecard
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Question Posted: October 21, 2011 05:20:43