Question

Tang Company accumulates the following data concerning raw materials in making its finished product: (1) Price per pound of raw materials—net purchase price $3.30, freight-in $0.50, and receiving and handling $0.30. (2) Quantity per gallon of finished product—required materials 3.70 pounds, allowance for waste and spoilage 0.70 pounds.

Compute the following. (Round answers to 2 decimal places, e.g. 1.25.)

(a)		Standard direct materials price per pound of raw materials.		$
(b)		Standard direct materials quantity per gallon.			pounds
(c)		Total standard materials cost per gallon.		$

Answer 1

(a)-Standard direct materials price per pound of raw materials

Standard direct materials price per pound of raw materials = Net purchase price + Freight charges + receiving and handling

= $3.30 + $0.50 + $0.30

= $4.10 per pound

(b)-Standard direct materials quantity per gallon.

Standard direct materials quantity per gallon = Required materials + allowance for waste and spoilage

= 3.70 pounds + 0.70 pounds

= 4.40 pounds

(c)-Total standard materials cost per gallon.

Total standard materials cost per gallon = Standard direct materials quantity per gallon x Standard direct materials price per pound of raw materials

= 4.40 Pounds x $4.10 per pound

= $18.04