Company Z accumulates the following data concerning raw materials in making one

Question

Company Z accumulates the following data concerning raw materials in making one gallon of finished product: (1) Price—net purchase price $2.30, freight-in $0.30, and receiving and handling $0.20. (2) Quantity—required materials 2.70 pounds, allowance for waste and spoilage 0.50 pounds.

Compute the following. (Round answers to 2 decimal places, e.g. 1.25.)

(a) Standard direct materials price per gallon.

$

(b) Standard direct materials quantity per gallon.

pounds (c) Total standard materials cost per gallon.

$

Explanation / Answer

(a) Standard direct materials price per gallon = Net purchase price + Freight-in cost + Receiving and handling charges

= $2.30 + $0.30 + $0.20 = $2.80

(b) Standard direct materials quantity per gallon = Required materials + Allowance for waste and spoilage

= 2.70 pounds + 0.50 pounds = 3.20 pounds

(a) Standard direct materials price per gallon = Net purchase price + Freight-in cost + Receiving and handling charges

= $2.30 + $0.30 + $0.20 = $2.80

(b) Standard direct materials quantity per gallon = Required materials + Allowance for waste and spoilage

= 2.70 pounds + 0.50 pounds = 3.20 pounds

(c) Total standard materials cost per gallon = $2.80 * 3.20 pounds = $8.96

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