nexus star Inc produces various kinds of oils. one of its product, Product X, is
ID: 2482812 • Letter: N
Question
nexus star Inc produces various kinds of oils. one of its product, Product X, is made from castor oil, beeswax, aloe Vera, and a base compound.
for the next 12 months, the company's purchasing agent believes that the cost of ingredients will be as follows:
castor oil: $6.50 per gallon
beeswax: $4.83 per pound
aloe vera: $18.50 per gallon
base compound: $20.00 per gallon
the direct labor time standard is 3.50 hours per unit as a standard direct labor rate of $12.00 per hour. the standard overhead rates are $15.00 per direct labor hour for the standard variable overhead rate and $13.00 per direct labor hours for the standard fixed overhead rate.
a) using these production standards, compute the standard unit cost of direct materials per unit if it takes 0.50 gallons of castor oil, 1 pound of beeswax, 0m25 gallons of aloe vera, and 1 gallon of base compound to product one unit of product x. round values to two decimal places.
b) using the standard unit cost of direct materials per case determined in a, and the production standards given for direct labor and overhead, compute the standard unit cost of one unit of product x.
Explanation / Answer
Nexus Star Inc. All Amounts in $ a) Raw Material Costs per unit of Product X Raw Material Name Qty. UOM Rate per Value Castor Oil 0.5 gallons 6.5 gallon 3.25 Beeswax 1 pound 4.83 pound 4.83 Aloe Vera 0.25 gallons 18.5 gallon 4.63 Base Compound 1 gallons 20 gallon 20.00 Total Raw Material Cost per unit of Product X 32.71 b) Standard Unit Cost for one unit of Product X Raw Material Costs as above 32.71 Direct Labor Costs 42 Overheads Variable Overheads 52.5 Fixed Overheads 45.5 98 Total Standard Unit Cost per unit 172.71
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