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 $2.30, freight-in $0.20, and receiving and handling $0.10.
(2) Quantity per gallon of the finished product—required materials 3.60 pounds, allowance for waste and spoilage 0.40 pounds.
Compute the following. (Round answers to 2 decimal places, e.g. 1.25.)
1. Standard direct materials price per gallon.
2. Standard direct materials quantity per gallon.
3. Total standard materials cost per gallon.

Answer 1

1. $2.60

2. 4 pounds

3. $10.40

Step-by-step explanation:

Given that,

Price per pound of raw materials = $2.30

Freight-in = $0.20

Receiving and handling = $0.10

Quantity per gallon of the finished product—required materials = 3.60 pounds

Allowance for waste and spoilage = 0.40 pounds

1. Standard materials price per gallon:

= Price per pound of raw materials + Freight-in + Receiving and handling

= $2.30 + $0.20 + $0.10

= $2.60

2. Standard materials quantity per gallon:

= Quantity required materials + Allowance for waste and spoilage

= 3.60 pounds + 0.40 pounds

= 4 pounds

3. Standard materials cost per gallon:

= Standard materials price per gallon × Standard materials quantity per gallon

= $2.60 × 4

= $10.40