Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds respectively. The purchase price is $2 per pound but a 2% discount is usually taken. Freight costs are $.10 per pound and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit and the allowance for rest periods and setup is .2 hours and .1 hours respectively.
-The standard direct materials price per pound is
A) $1.96.
B) $2.00.
C) $2.13
D) $2.17

Question

Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds respectively. The purchase price is $2 per pound but a 2% discount is usually taken. Freight costs are $.10 per pound and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit and the allowance for rest periods and setup is .2 hours and .1 hours respectively. 
-The standard direct materials price per pound is
A) $1.96.
B) $2.00.
C) $2.13
D) $2.17

Quizplus · Accepted Answer

The standard direct materials price per pound is calculated by adding the purchase price, freight costs, and receiving and handling costs, then subtracting the discount. This is ($2.00 + $0.10 + $0.07) - 2% of $2.00 = $2.17 - $0.04 = $2.13.

Oxnard Industries Produces a Product That Requires 2