Question

Teal Mountain Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.3 pounds and 0.1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $0.10 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $12.00.00 per hour, but a raise which will average $0.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 2.5 hour per unit, and the allowance for rest periods and setup is 0.1 hours and 0.2 hours, respectively. The standard direct materials price per pound is:______.

Answer 1

Answer:

$2.127.

Explanation:

According to the scenario, computation of the given data are as follows,

Purchase price per pound = $2

Freight (Add)   =  $0.10

Handling cost (Add) =  $0.07

Total cost = $2.17

Discount (Less) = (2% × $2.17) = $0.043

Direct material price = $2.127

Hence, standard direct materials price per pound is $2.127.