A company is in the process of setting standard unit costs for next period. Product J uses two types of material, P and S. 7 kg of material P and 3 kg of material S are needed, at a standard price of $4 per kg and $9 per kg respectively. Direct labour will cost $7 per hour and each unit of J requires 5 hours of labour. Production overheads are to be recovered at the rate of $6 per direct labour hour, and general overhead is to be absorbed at a rate of ten per cent of production cost. What is the standard prime cost for one unit of product J?
A company is in the process of setting standard unit costs for next period. Product J uses two types of material, P and S. 7 kg of material P and 3 kg of material S are needed, at a standard price of $4 per kg and $9 per kg respectively. Direct labour will cost $7 per hour and each unit of J requires 5 hours of labour. Production overheads are to be recovered at the rate of $6 per direct labour hour, and general overhead is to be absorbed at a rate of ten per cent of production cost. What is the standard prime cost for one unit of product J?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A company is in the process of setting
material, P and S. 7 kg of material P and 3 kg of material S are needed, at a standard price of $4 per kg
and $9 per kg respectively.
Direct labour will cost $7 per hour and each unit of J requires 5 hours of labour.
Production
is to be absorbed at a rate of ten per cent of production cost.
What is the standard prime cost for one unit of product J?
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