Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot. Carpenters' wages are $25.00 per hour. 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

Quizplus · Accepted Answer

The direct materials cost standard includes the cost of the cedar wood plus any costs related to delivering it. Since the current cost of cedar wood is $4.00 per square foot, and delivery costs are $0.25 per board foot, we need to convert the board feet to square feet. Assuming a thickness of 1 inch (typical for most cabinets), 1 board foot equals 1 square foot. Therefore, the total cost of the cedar wood is $4.25 per square foot ($4.00 for the wood + $0.25 for delivery). The other costs (carpenters' wages, payroll, and benefits) are not included in the direct materials cost standard, as they are considered direct labor costs.

Wood Designs Company, a Custom Cabinet Manufacturing Company, Is Setting