Shipco. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. overhead is assigned at the rate of $9 per direct labor hour. what is the total standard cost for one unit of product that would appear on a standard cost card? a. $25.02. b. $11.52. c. $2.40. d. $2.52. e. $3.42.

The correct answer is E.

Explanation:

Giving the following information:

ShipCo. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is assigned at the rate of $9 per direct labor hour.

Direct material= 1.2*0.85= $1.02

Direct labor= 0.1*15= $1.5

Overhead= 0.1*9= $0.9

Total= $3.42

E. $3.42

Explanation:

Standard cost is the charge/cost to be budgeted to be incurred on a process, unit or manufacturing activity based on reliable estimates. The standard cost is usually compared with the actual cost after production has taken place.

It comprises of:

Direct material Cost : The standard quantity/unit of material to be used at a standard price.

Direct Labor Cost: The standard hours to be utilised at the standard rate for labour.

Overhead Cost: The estimated overhead fixed overhead charge and the variable overhead rate and the number of hours for applying the fixed and variable overhead rate.

Calculation

Material Cost = 1.2metres × $0.85 = $1.02

Labour Cost = 0.1 × $15 = $1.5

Overhead Cost = 0.1 × $9 = $0.90

Total Standard Cost = $[1.02 + 1.5 + 0.90] = $3.42

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