# Accounting trouble.

A cost analyst for Stamper Manufacturing Co. has assembled the following data about the Model 24 stamp pad:

The piece of sheet metal from which five pad cases can be made costs \$0.24.
This amount is based on the number of sheets in a 4,200-pound bundle of sheet metal, which is the usual purchase quantity.
The foam pad that is put in the case costs \$0.06, based on the number of pads that can be cut from a large roll of foam.
Production standards, based on engineering analysis recognizing attainable performance, provide for the manufacture of 1,000 pads by two workers in an eight-hour shift. The standard direct labor pay rate is \$15 per hour.
Manufacturing overhead is applied to units produced using a predetermined overhead application rate of \$16 per direct labor hour, of which \$6 per hour is fixed manufacturing overhead.

Required:
(a)
Calculate the standard absorption cost of a package of 10 stamp pads. (Do not round your intermediate calculations. Round final answer to 2 decimal places.)

Standard absorption cost per package: ?

(b)
Stamper Manufacturing Co.'s management is considering a special promotion that would result in increased sales of 500 packages of 10 pads per package. Calculate the cost per package that is relevant for this analysis. (Do not round your intermediate calculations. Round final answer to 2 decimal places.)

Relevant cost per package: ?

 paraclete Posts: 1,922, Reputation: 614 Ultra Member #2 Jun 11, 2012, 03:34 PM
Quote:
 Originally Posted by needygirl A cost analyst for Stamper Manufacturing Co. has assembled the following data about the Model 24 stamp pad: The piece of sheet metal from which five pad cases can be made costs \$0.24. This amount is based on the number of sheets in a 4,200-pound bundle of sheet metal, which is the usual purchase quantity. The foam pad that is put in the case costs \$0.06, based on the number of pads that can be cut from a large roll of foam. Production standards, based on engineering analysis recognizing attainable performance, provide for the manufacture of 1,000 pads by two workers in an eight-hour shift. The standard direct labor pay rate is \$15 per hour. Manufacturing overhead is applied to units produced using a predetermined overhead application rate of \$16 per direct labor hour, of which \$6 per hour is fixed manufacturing overhead. Required: (a) Calculate the standard absorption cost of a package of 10 stamp pads. (Do not round your intermediate calculations. Round final answer to 2 decimal places.) Standard absorption cost per package: ? (b) Stamper Manufacturing Co.'s management is considering a special promotion that would result in increased sales of 500 packages of 10 pads per package. Calculate the cost per package that is relevant for this analysis. (Do not round your intermediate calculations. Round final answer to 2 decimal places.) Relevant cost per package: ?
So standard cost and marginal cost go to it
 needygirl Posts: 11, Reputation: 1 New Member #3 Jun 12, 2012, 05:06 PM
Quote:
 Originally Posted by paraclete so standard cost and marginal cost go to it
You're not even answering anything. Obviously that happens.

I have
.48
.6
2.4
And am struggling to find the overhead which I add to these numbers to get the correct answer.
 paraclete Posts: 1,922, Reputation: 614 Ultra Member #4 Jun 12, 2012, 06:01 PM
Quote:
 Originally Posted by needygirl You're not even answering anything. Obviously that happens. I have .48 .6 2.4 and am struggling to find the overhead which I add to these numbers to get the correct answer.
It would be much easier to address your issues if you provided your workings. I have no idea what your raw numbers refer to. I see my role as discussing principle with you, I do not and will not provide sample answers. I don't have time to work through problems in detail and in any case you need to do it because it is the way you learn. You can calculate the allocated overhead in the same way you calculate direct labour cost. You have been given certain data wrapped up in a narrative which may or may not be relevant. You must extract and intrepret the relevant data. It actually takes more time searching the net for an answer than it does to answer the problem

I calculate the standard unit cost to be \$0.604 you can find the package cost yourself

Most of the costs are what are called variable costs. For additional volume pricing may be based on marginal cost

Marginal cost is the cost of producing one more unit .following the course of action suggested may result in considerable excess inventory and we are not given sufficient information to calculate that outcome

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