Exercise 25-3 Stefani Company has gathered the following information about its p

Question

Exercise 25-3 Stefani Company has gathered the following information about its product. Direct materials: Each unit of product contains 4.60 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.20 pounds. Materials cost $ 5 per pound, but Stefani always takes the 3.00 % cash discount all of its suppliers offer. Freight costs average $ 0.45 per pound Direct labor. Each unit requires 2.10 hours of labor. Setup, cleanup, and downtime average 0.10 hours per unit. The average hourly pay rate of Stefani's employees is $10.40. Payroll taxes and fringe benefits are an additional $ 3.10 per hour. Manufacturing overhead. Overhead is applied at a rate of $ 6.90 per direct labor hour. Compute Stefani's total standard cost per unit. (Round intermediate calculations and final answer to 2 decimal places, e.g. 1.25.) Total standard cost per unit

Explanation / Answer

25.3 Material Cost Each units requiredmaterial in pounds (A) 4.6 Spoilge per unit produced in pounds (B) 0.2 Total material required in pounds per unit (C =A+B) 4.8 Cost per pound D 5 Discount 3% E= D*3% 0.15 Net price per pound F=D-E 4.85 Fright cost per pound G 0.45 Landed cost per pound H=F+G 5.3 Total material cost per unit I = H*C 25.44 Direct Labor Labor required per unit (2.10+0.10) A 2.2 Average Hourly rate B 10.4 Payroll taxes & fring Benefit taxes C 3.1 Labor Cost per hour D= B+C 13.5 Total Direct labor cost per unit E=D*A 29.7 Manufactuing Overhead Manufactuing Overhead per direct labour hour A 6.9 Labor required per unit (2.10+0.10) B 2.2 Total manufacturing Overhead C= A*B 15.18 Total Standard Cost per unit Material Cost +Labor Cost +manufactuing Cost Total Standard Cost per unit 25.44+29.7+15.18 70.32 25-5 A Total Direct material Variance (Standard Cost for actual Production - Actual Cost) (9100*3*6.8-27500*6.6)         4,140 Favorable Formula material Price Variance (Standard Price - Actual Price)*Actual Qty. material Price Variance (6.8-6.6)*27500         5,500 Favorable Formula material Qty. Variance (Standard Qty- Actual Qty.)*Standard Price material Qty. Variance (9100*3-27500)*6.8         1,360 Unfavorable B Total Direct material Variance (Standard Cost for actual Production - Actual Cost) (9100*3*6.8-26500*6.9)         2,790 Favorable Formula material Price Variance (Standard Price - Actual Price)*Actual Qty. material Price Variance (6.8-6.9)*26500         2,650 UnFavorable Formula material Qty. Variance (Standard Qty- Actual Qty.)*Standard Price material Qty. Variance (9100*3-26500)*6.8         5,440 Favorable

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