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19 July, 01:57

Shipp, inc. manufactures a product requiring two pounds of direct material. during 2016, shipp purchases 24,000 pounds of material for $99,200 when the standard price per pound is $4. during 2016, shipp uses 22,000 pounds to make 12,000 products. the standard direct material cost per unit of finished product is

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  1. 19 July, 05:08
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    Answer: $8

    Explanation:

    Required amount of Raw material for each unit of the product = 2 pounds

    Therefore, for 12,000 units of product,

    raw material required equals:

    12,000 * 2 = 24,000 pounds

    Standard price per pound equals $4

    Therefore, Standard cost of 24,000 pounds of material equals:

    24,000 * $4 = $96,000

    Cost per unit equals:

    (Total cost : Number of Units)

    $96,000 : 12,000 = $8

    Therefore, the standard direct material cost per unit of finished product is $8
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