Watrous Corporation Is Developing Standards for a Product

question 27

Essay

Watrous Corporation is developing standards for a product. Each unit of output of the product requires 0.82 kilogram of a particular input. The allowance for waste and spoilage is 0.07 kilogram of this input for each unit of output. The allowance for rejects is 0.09 kilogram of this input for each unit of output.
Required:
Determine the standard kilograms of this input per unit of output. Show your work!

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the period begins based on estimated costs and activity levels.

Direct Labour Hour

Direct labour hour is a measure of the amount of time workers spend on direct production activities, directly involved in manufacturing goods or providing services.

Manufacturing Overhead

Manufacturing expenses not directly linked to individual product units, encompassing indirect materials and labor.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to products based on a specific activity base, like machine hours or labor hours.