Waterstone Industries is setting standard costs for one of its products. The main material is fiber board sold by the square foot. The current cost of fiber board is $4.00 per square foot from Waterstone's preferred supplier. Delivery costs are $0.25 per board foot. Waterstone's wages per hour are $25.00. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct materials cost standard per square foot?

Question

Ashanti Barker

Business

19 September, 13:41

Waterstone Industries is setting standard costs for one of its products. The main material is fiber board sold by the square foot. The current cost of fiber board is $4.00 per square foot from Waterstone's preferred supplier. Delivery costs are $0.25 per board foot. Waterstone's wages per hour are $25.00. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct materials cost standard per square foot?

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Answers (1)

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Ryan Barron · Answer 1

Direct materials cost per square foot = $4.25

Explanation:

Direct material costs represent the costs of all materials which are used essentially and wholly for the purpose of production of goods. These materials usually are those which form part of the product.

For example, flour and sugar are direct materials used for the purpose of producing of bread.

Direct material costs are charged directly to the product.

Direct labour cost : Direct workers are those who are actively engaged exclusively for the production of goods. They include machine operators in the factory, bakers in a bakery, e. t. c. Direct labour costs are charged directly to the product cost

Direct material cost per standard square foot

=$4.00 + $0.25

= $4.25

Direct materials cost per square foot = $4.25