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

As our company sells bags of one dozen chocolate chip cookies, so we have to explain the total standard cost (excluding overhead) for the chocolae chip cookies :

Standard Cost for every 10 grams of chocolate chip cookies:

Material : Flour 8 grams @ $1 per kilogram

sugar 6 grams @ $2 per kilogram

chocolate powder 4 grams @ $1 per kilogram

Labor : 2 hours direct labor @ $4 per hour

Total Standard costs:

For one kilogram of chocolate chip cookies :

Direct Material : Floor = $1

Sugar = $2

chocolate = $1

Total material = $4 per kg

Direct labor = $4*2 = $8 per kg

Standard cost = $12 per kg = $0.012 per 10 gram of chocolate chip cookee

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