Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 23

Determining Standard Direct Materials Cost Agrichem manufactures Insect-Be-Gone. Each bag of the product contains 60 pounds of direct materials. Twenty-five percent of the materials evaporate during manufacturing. The budget allows the direct materials to be purchased at $2.50 a pound under terms of 2/10, n/30. The company's stated policy is to take all available cash discounts. Determine the standard direct materials cost for one bag of Insect-Be-Gone.