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Vaughn's Bakery makes a variety of home-style cookies for upscale restaurants in the Atlanta metropolitan area. The company's best-selling cookie is the double chocolate almond supreme. Vaughn's recipe requires 10 ounces of a commercial cookie mix, 5 ounces of milk chocolate, and 1 ounce of almonds per pound of cookies. The standard direct materials costs are $0.80 per pound of cookie mix, $4 per pound of milk chocolate, and $13 per pound of almonds. Each pound of cookies requires 1 minute of direct labor in the mixing department and 6 minutes of direct labor in the baking department. The standard labor rates in those departments are $14.60 per direct labor hour (DLH) and $29 per DLH, respectively. Variable overhead is applied at a rate of $36.30 per DLH; fixed overhead is applied at a rate of $60 per DLH.

Required:
Calculate the standard cost for a pound of Vaughn's double chocolate almond supreme cookies.

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Answer:

$16.90

Explanation:

Calculation to determine the standard cost for a pound of Vaughn's double chocolate almond supreme cookies.

DIRECT MATERIAL:

Cookie mix {(0.80/16)*10} $ 0.5

Milk chocolate {(4/16)*5} $1.25

Almonds {(13/16)*1} $ 0.8125

DIRECT LABOR:

Mixing Department{($14.60/60)*1} $ 0.24

Baking Department{(29/60)*6} $ 2.9

Variable Overhead {(36.30/60)*7} $ 4.2

Fixed Overhead {(60/60)*7} $ 7

(1 ounces+6 ounces=7)

Total Cost per pound $ 16.90

Note that 1 pound will give us 16 ounces and 1hour will give us 60 minutes

Therefore the standard cost for a pound of Vaughn's double chocolate almond supreme cookies will be $16.99

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