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Kimm Company

Price: $1.99

Kimm Company has gathered the following information about its product.
Direct materials. Each unit of product contains 4.5 pounds of materials. The average
waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials
cost $5 per pound, but Kimm always takes the 2% cash discount all of its suppliers
offer. Freight costs average $0.25 per pound.

Direct labor. Each unit requires 2 hours of labor. Setup, cleanup, and downtime
average 0.3 hours per unit. The average hourly pay rate of Kimm’s employees is $12.
Payroll taxes and fringe benefits are an additional $3 per hour.

Manufacturing overhead. Overhead is applied at a rate of $7 per direct labor hour.

Compute Kimm’s total standard cost per unit.

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