Question

Shipp, inc. manufactures a product requiring two pounds of direct material. during 2016, shipp purchases 24,000 pounds of material for $99,200 when the standard price per pound is $4. during 2016, shipp uses 22,000 pounds to make 12,000 products. the standard direct material cost per unit of finished product is

Answer 1

Answer: $8

Explanation:

Required amount of Raw material for each unit of the product = 2 pounds

Therefore, for 12,000 units of product,

raw material required equals :

12,000 × 2 = 24,000 pounds

Standard price per pound equals $4

Therefore, Standard cost of 24,000 pounds of material equals :

24,000 × $4 = $96,000

Cost per unit equals :

(Total cost ÷ Number of Units)

$96,000 ÷ 12,000 = $8

Therefore, the standard direct material cost per unit of finished product is $8