Required: a. Calculate the standard absorption cost of a package of 19 stamp pads. b. Stamper Manufacturing Company's management is considering a special promotion that would result packages of 19 pads per package. Calculate the cost per package that is relevant for this analysis.
Required: a. Calculate the standard absorption cost of a package of 19 stamp pads. b. Stamper Manufacturing Company's management is considering a special promotion that would result packages of 19 pads per package. Calculate the cost per package that is relevant for this analysis.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A cost analyst for Stamper Manufacturing Company has assembled the following data about the Model 24 stamp pad:
The piece of sheet metal from which 10 pad cases can be made costs $0.19.
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This amount is based on the number of sheets in a 4,600-pound bundle of sheet metal, which is the usual purchase quantity.
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› The foam pad that is put in the case costs $0.03, based on the number of pads that can be cut from a large roll of foam.
●
●
Production standards, based on engineering analysis recognizing attainable performance, provide for the manufacture of 1,550
pads by 9 workers in an eight-hour shift. The standard direct labor pay rate is $13.05 per hour.
Manufacturing overhead is applied to units produced using a predetermined overhead application rate of $18.5 per direct labor
hour, of which $7.7 per hour is fixed manufacturing overhead.
Required:
a. Calculate the standard absorption cost of a package of 19 stamp pads.
b. Stamper Manufacturing Company's management is considering a special promotion that would result in increased sales of 2,700
packages of 19 pads per package. Calculate the cost per package that is relevant for this analysis.
Note: For all requirements, do not round intermediate calculations. Round final answer to 2 decimal places.
a. Standard absorption cost per package
b. Relevant cost per package
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