Chapter 11, Problem 11.3E

Stefani Company has gathered the following information about its product.

Direct materials. Each unit of product contains 4.5 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost S5 per pound, but Stefani always takes the 2% cash discount all of its suppliers offer. Freight costs average $0.25 per pound.

Direct labor. Each unit requires 2 hours of labor. Setup, cleanup, and downtime average 0.4 hours per unit. The average hourly pay rate of Stefani s employees is $12. Payroll taxes and fringe benefits are an additional $3 per hour

Manufacturing overhead. Overhead is applied at a rate of $7 per direct labor hour

Instructions

Compute Stefani's total standard cost per unit.