Assume your company sells bags of one dozen chocolate chip cookies. These cookie

Question

Assume your company sells bags of one dozen chocolate chip cookies. These cookies are made in your kitchen for now, as your company is just starting up. Each student should individually estimate the direct materials and direct labor inputs needed to produce each bag of cookies. For each type of direct material (for example, flour, sugar, etc.) and direct labor, determine the standard quantity and standard price. Since the cookies are made in your kitchen, you can ignore overhead costs. The result should be a total standard cost (excluding overhead) for the product or service.

Explanation / Answer

Direct Material Cost for 1 dozen of choclate chips cookies =

1-1/4 cups butter, softened

3/4 cups sugar

1/4 cup brown sugar

1 egg

1/8 cup milk

1 teaspoon vanilla extract

4 cups all-purpose flour

2 teaspoons baking powder

1/2 teaspoon salt

1 cups chocolate chips

Total Direct material Cost = $.72 per cookie

Labour cost = $ .32 per cookie

Total Standard cost = .72+.32 = $1.04

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