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 $2.59, freight-in $0.52, and receiving and handling $0.39. (2) Quantity per gallon of finished product-required materials 3.34 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. c) Total standard materials cost per gallon. pounds

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 + Receiving and handling charges

= $2.59 + $0.52 + $0.39

= $3.50

(b)-Standard direct materials quantity per gallon

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

= 3.34 Pounds + 0.70 Pounds

= 4.04 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

= 4.04 Pounds x $3.50 per Pound

= $14.14