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Lunna [17]
3 years ago
5

Waterstone Industries is setting standard costs for one of its products. The main material is fiber board sold by the square foo

t. The current cost of fiber board is $4.00 per square foot from Waterstone’s preferred supplier. Delivery costs are $0.25 per board foot. Waterstone’s wages per hour are $25.00. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct materials cost standard per square foot?
Business
1 answer:
Fiesta28 [93]3 years ago
5 0

Answer:

Direct materials cost per square foot= $4.25

Explanation:

Direct material costs represent the costs of all materials which are used essentially and wholly  for the purpose of production of goods. These materials usually are those which form part of the product.

For example, flour and sugar are direct materials used for the purpose of producing of bread.

Direct material costs are charged directly to the product.

Direct labour cost : Direct workers are those who are actively engaged exclusively for the production of goods. They include machine operators in the factory, bakers in a bakery, e.t.c. Direct labour costs are charged directly to the product cost

Direct material cost per standard square foot

=$4.00 + $0.25

= $4.25

Direct materials cost per square foot= $4.25

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Answer:

80000 unit of Alpha

Explanation:

This is a Limiting factor/resource constraint question. In certain situations entities suffer from shortage of necessary resources (e.g: shortage of material, labor hours, machine hours), in such circumstances entities strive to allocate the constraint resources to the production of those products which generate the highest contribution per limiting factor and help maximize total contribution. In this case the limiting factor for Cane is Raw material.

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Where, SP stands for selling price and VC stands for variable cost.

CPU= 120-69

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Beta:

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<em />

<em />

<em>Now, lets calculate contribution per limiting factor.</em>

Alpha:

CLF: $51÷2

CLF: $25.5        1st Rank

Beta:

CLF: $40÷5

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It requires 2 pounds of raw material to produce one unit of Alpha (i.e 80000×2=160000) Therefore Cane should produce 80000 units of Alpha only in order to maximize its profits.

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