Question

Whispering Company is planning to produce 1,100 units of product in 2020. Each unit requires 2.60 pounds of materials at $4.80 per pound and a half-hour of labor at $14.00 per hour. The overhead rate is 90% of direct labor. (a) Compute the budgeted amounts for 2020 for direct materials to be used, direct labor, and applied overhead. Direct materials $ Direct labor $ Overhead $ (b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.) Standard cost $

Answer 1

Answer:

Explanation:

a. The answer to question (a) goes thus:

Direct materials will be:

= (1,100 × $2.60) × $4.80

= $13,728

Direct labor will be:

= (1,100 × 1/2) × $14.00

= $7,700

Overhead will be:

= $7,700 × 90%

= $7700 × 0.9

= $6,930

b. The standard cost of one unit of product will be calculated as follows:

Direct materials = ($2.60 × $4.80) = $12.48

Add: Direct labor (1/2 × $14.00) = $7.00

Add: Overhead = ($7.00 × 90%) = $6.30

Standard cost = $12.48 + $7.00 + $6.30 = $25.78