Oxnard industries produces a product that requires 2 6 pounds of materials per u
ID: 2498841 • Letter: O
Question
Oxnard industries produces a product that requires 2 6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount usually taken. Freight costs are $.10 per pound, and receiving and handling cost are $.07 per pound. The hourly wage rate is $ 12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hour and .1 hours, respectively. The standard direct materials price per pound isExplanation / Answer
The required table is as below:
Material cost
Per unit
Material
2.6 pound
Add: Waste
0.3 pound
Add: Spoilage
0.1 pound
Total material units (a)
3 pound
Material purchase price per pound
$2
Less: Discount at 2%
$0.04
Material purchase price after discount
$1.96
Add: Freight
$0.10
Add: Receiving and handling
$0.07
Material cost per pound
$2.13
Standard direct material price per pound
$2.13
Answer: C, $2.13
Material cost
Per unit
Material
2.6 pound
Add: Waste
0.3 pound
Add: Spoilage
0.1 pound
Total material units (a)
3 pound
Material purchase price per pound
$2
Less: Discount at 2%
$0.04
Material purchase price after discount
$1.96
Add: Freight
$0.10
Add: Receiving and handling
$0.07
Material cost per pound
$2.13
Standard direct material price per pound
$2.13
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