Question

A company is setting its direct materials and direct labor standards for its leading product. Direct materials cost from the supplier are​ $5 per square​ foot, net of purchase discount.​ Freight-in amounts to​ $0.40 per square foot. Basic wages of the assembly line personnel are​ $17 per hour. Payroll taxes are approximately​ 22% of wages. Benefits amount to​ $4 per hour. How much is the direct materials cost standard per square​ foot?

Answer 1

Answer:

$5.4

Explanation:

If a company is setting its direct materials and direct labor standards for its leading product and Direct materials cost from the supplier are​ $5 per square​ foot, net of purchase discount.​ Freight-in amounts to​ $0.40 per square foot.

Therefore the direct materials cost standard per square​ foot will be: Direct materials cost from the supplier are​ $5 per square​ foot, net of purchase discount., PLUS  Freight-in amounts to​ $0.40 per square foot. which is $5.4 per square foot.

Generally Direct Material Cost is the total cost incurred by the company in purchasing the raw material along with the cost of other components including packaging, freight and storage costs, taxes, etc that are related directly to the manufacturing and production of various products of the company.