Description
In 100 words or more reply to the statement below about direct materials standard.
Raw materials that are traceable to manufactured product is direct materials. For example, the amount of bananas it takes to make banana bread would be direct materials. One would analyze how many direct materials go into a product and determine the cost of every single unit. In most products there is more than one direct material and to get accurate cost one must separate the standard prices of each direct material. For example, Pizza Hut may pay $10 for a pound of cheese. There would also be extra charges for freight and receiving and handling. It could potentially cost $0.30 for S&H and $0.10 per pound on freight. The direct materials standard price would be $10.40.
Explanation & Answer
19 November 2017 Direct material standard The amount of raw materials that are traceable to a manufactured commodity, or amount consumed during product manufacture, for example amount of the flour used to make a cake is what is referred to as direct materials. From the given statement we have two types of direct materials, which is the direct materials standard price (SP) and the direct material standard quantity (SQ). The bill of materials lists the direct materials shows the unit quantities and the standard cost for all materials used for the manufacture of the product. Include in the list of direct materials are any spoilage and the scrap that results from the manufacture of the product and doesn’t include those materials used for the general business overhead, and for instance the air filters for ventilation system In a manufacturing facility which will be included as manufacturing overheads. Materials consumed as general overhead of the business do not...
