Kimm Company has gathered the information shown below about its product. Direct

Question

Kimm Company has gathered the information shown below about its product.

Direct materials. Each unit of product contains 3.30 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.30 pounds. Materials cost $2 per pound, but Kimm always takes the 1.67% cash discount all of its suppliers offer. Freight costs average $0.39 per pound.

Direct labor. Each unit requires 2.40 hours of labor. Setup, cleanup, and downtime average 0.28 hours per unit. The average hourly pay rate of Kimm’s employees is $13.60. Payroll taxes and fringe benefits are an additional $3.20 per hour.

Manufacturing overhead. Overhead is applied at a rate of $5.10 per direct labor hour. Compute Kimm’s total standard cost per unit. (Round standard costs to 2 decimal places, e.g. 2.75.)

Explanation / Answer

pounds $ per pound Direct materials 3.3 normal wastage 0.3 total pound per unit 3.6 Material cost 1.9666 (2*.9833) (post discount) Freight cost 0.39 total cost per unit 2.3566 Material cost per unit 8.48 $ per unit (3.6*2.3566) Direct Labor 2.4 Setup downtime 0.28 Total time 2.68 hourly pay 13.6 fringe benefits 3.2 Total pay 16.8 Labor cost per unit 45.024 $ per unit Manufactuing overheads 13.668 $ per unit Standard cost per unit 67.18 $ per unit

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