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. | $ |
(a) Standard direct materials price per pound of raw materials
Standard direct materials price per pound of raw materials = Net Purchase price + Freight + Receiving and handling charges
= $3.30 + $0.50 + $0.30
= $4.10
(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 material
= $4.10 * 4.4 pounds =$18.04
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