Question

XYZ Company has budgeted production of Item #123 for April, May, and June of 2,400, 3,200, and 2,800 units, respectively. XYZ Company currently pays a standard rate of $3 per foot for raw material A and $5 per sheet for raw material B. Each unit produced requires 4 feet of raw material A and 2 sheets of raw material B. Each unit produced also requires 30 minutes of cutting direct labor time at a standard rate of $16 per hour and 2 hours of assembly direct labor time at a standard rate of $20 per hour. Manufacturing overhead is applied at the standard rate of $10 per direct labor hour.

The total standard cost of May’s budgeted production of Item #123 is:

A) $198,400

B) $208,800

C) $304,000

D) $308,800

Answer 1

Option C : $304,000
	Budgeted production for the month of May = 3200 units
	Calculation of manufacturing cost per unit
	Raw material A (4 Feet * $3)	$           12.00
	Raw material B ( 2 sheets * $5)	$           10.00
	30 minutes of cutting Direct labour ($16 * 1/2 hour)	$              8.00
	2 hours of assembly directly labour ( $20 * 2 hours)	$           40.00
	Manufacturing overhead ($10 * 2.5 hours)	$           25.00
	Total manufacturing cost per unit	$           95.00
	Total standard cost of May's budgeted production of item# 123 ($95 * 3200)	$ 304,000.00
	*Total direct labour hours (30 minutes of cutting Direct labour + 2 hours of assembly directly labour)