Shipp Inc. manufactures a product requiring two pounds of direct material. During 2016 Shipp purchases 24000 pounds of material for $99200 when the standard price per pound is $4. During 2016 Shipp uses 22000 pounds to make 12000 products. The standard direct material cost per unit of finished product is
A) $8.27.
B) $9.01.
C) $8.00.
D) $8.53.

Question

Quizplus · Accepted Answer

Standard direct material cost per unit of finished product:

= Standard direct material cost for 2 pounds of material / Number of finished products produced with 2 pounds of material
= ($4 per pound x 2 pounds) / 1
= $8

Therefore, the standard direct material cost per unit of finished product is $8. Choice C is the best answer.

Shipp Inc Manufactures a Product Requiring Two Pounds of Direct Material