RHO Company began its operations on January 1 and produces a single product that sells for $10.25 per unit. The standard capacity is 80,000 units per year. The 80,000 units were produced, and 70,000 units were sold during the year. Manufacturing costs and selling and administrative expenses follow:

Fixed Costs

Variable Costs

Raw materials--

$2.50 per unit produced

Direct labor

--

1.50 per unit produced

Factory overhead

$120,000

1.00 per unit produced

Selling and administrative

80,000

.50 per unit sold

What is the standard cost of manufacturing a unit of product?

a.$6.00

b.$6.50

c.$5.00

d.$5.50

Question

Guillermo

Business

8 November, 07:23

RHO Company began its operations on January 1 and produces a single product that sells for $10.25 per unit. The standard capacity is 80,000 units per year. The 80,000 units were produced, and 70,000 units were sold during the year. Manufacturing costs and selling and administrative expenses follow:

Fixed Costs

Variable Costs

Raw materials--

$2.50 per unit produced

Direct labor

--

1.50 per unit produced

Factory overhead

$120,000

1.00 per unit produced

Selling and administrative

80,000

.50 per unit sold

What is the standard cost of manufacturing a unit of product?

a.$6.00

b.$6.50

c.$5.00

d.$5.50

+5

Answers (1)

Know the Answer?

Maximo Davis · Answer 1

Direct material per unit produced = 2.50

Direct labor per unit produced = 1.50

Factory overhead:

Factory overhead - $120,000

80,000 units were produced

Fixed factory overhead = 120,000/80,000=1.5

Also, Factory variable overhead per unit produced = 1

Total factory overhead = (120000/80000+1) = 2.50

Standard cost of manufacturing a unit of product = 2.50+1.50+2.50 = 6.50