Question

Danny’s Delights is a wholesale bakery. Danny makes a variety of baked goods which he sells to restaurants and grocery stores. His best-selling item is a peanut butter cookie. The recipe calls for 1 cup of peanut butter, 1 cup of sugar and 1 egg. Each recipe makes a batch of one dozen cookies. Danny’s standard direct materials cost for batch of cookies is $0.90 for peanut butter, $0.15 for sugar and $0.10 for an egg. In addition, the cookies are packaged by the dozen in cardboard containers costing $0.23 each. One batch of cookies requires 4 minutes preparation time, 8 minutes of cooking time, and 3 minutes of packaging time. The standard wage rate is $8 per hour. Overhead is applied at 50% of direct labor cost.

Calculate the standard cost for a batch (1 dozen) of peanut butter cookies.

Standard cost for a dozen cookies

Answer 1

Direct Material cost = Cost of ( peanut butter + sugar + egg + packaging material )

= 0.90 + 0.15 + 0.10 + 0.23

   = $ 1.38

Direct labour cost = ( Time required in mins to prepare, cook and pack / 60 ) x $8

= ( (4 + 8 + 3) / 60 ) x 8

   = 0.25 x 8

   = $ 2.00

Overheads = 50% x Direct labour cost

= 0.50 x 2.00

= $ 1.00

Standard cost for a dozen cookies = Direct Material cost + Direct Labour cost + Manufacturing Overheads

= 1.38 + 2.00 + 1.00

= 4.38

Therefore, the standard cost for a dozen cookies is $ 4.38.