Kimm Company has gathered the following information about its product. Direct ma

Question

Kimm Company has gathered the following information about its product. Direct materials. Each unit of product contains 4.50 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.20 pounds. Materials cost S4 per pound, but Kimm always takes the 2.16% cash discount all of its suppliers offer. Freight costs average $0.27 per pound. Direct labor. Each unit requires 1.80 hours of labor. Setup, cleanup, and downtime average 0.26 hours per unit. The average hourly pay rate of Kimm's employees is $13.80. Payroll taxes and fringe benefits are an additional $3.30 per hour. Manufacturing overhead. Overhead is applied at a rate of $5.80 per direct labor hour. Compute Kimm's total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.) Total standard cost per unit Click if you would like to Show Work for this question:

Explanation / Answer

Calculation of Standard Cost per unit Material Cost per pound $/pound Purchase cost of Direct material           4.00 less:- Cash discount @ 2.16%           0.09           3.91 Freight Cost per unit 0.27 Direct material Cost per unit           4.18 Direct labour hours Required Hrs Direct labour 1.8 Set up and clean 0.26 Total Time 2.06 Standard cost per unit Unit Qty Rate per unit Total Material pound 4.5           4.18         18.83 Normal wastage pound 0.2           4.18           0.84 Direct Labour cost (including Set up time) hrs 2.06 13.8         28.43 pay roll taxes and benefits Hrs 2.06 3.3           6.80 Manufacturing overhead 2.06 5.8         11.95 Standard cost per unit         66.84 * Assumption :- 1) Set up time, cleaning time assume as extra from 1.8 hours. 2) Set up and cleaning time also consider as direct labour hour. As without set up machine can't work. It is an idle hours, which require for production. Alternatively Standard cost per unit Unit Qty Rate per unit Total Material pound 4.5           4.18         18.83 Normal wastage pound 0.2           4.18           0.84 Direct Labour cost (including Set up time) hrs 1.8         13.80         24.84 pay roll taxes and benefits Hrs 1.8           3.30           5.94 Manufacturing overhead 1.8           5.80         10.44 Standard cost per unit         60.88 * Assumption :- 1) Set up time, cleaning time assume including in 1.8 hours. 2) Set up and cleaning time also consider as direct labour hour. As without set up machine can't work. It is an idle hours, which require for production.

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