Moseley Inc. is developing standards for its products. One product requires a chemical that is purchased for $20 per pound from the supplier. By buying In bulk (which they do), the company gets a discount of 10% off the purchase price. Shipping costs from the supplier\'s warehouse amount to $50 per 100 pounds the chemical. Each unit requires 2.5 pounds of the chemical. The allowance for waste and spoilage Is .10 pounds for each unit of output. The allowance for rejects Is .2 pounds for each unit of output. Solution * Per Unit of the Output: > Chemical required - 2.5 pounds Add :- spoilage - 0.1 pounds rejects - 0.2 pounds Total - 2.80 pounds per unit of Output > Transportation cost (purchase) - $50/100 pounds = $ 0.50 per pound > Purchase cost of chemical - $ 20 - 10 % discount = $ 18 per pound * Standard Cost of Material per unit of Output - 2.80 pound @ $18.50 per pound = $ 51.80 .

1. Moseley Inc. is developing standards for its products. One product requires a chemical that is
purchased for $20 per pound from the supplier. By buying In bulk (which they do), the company
gets a discount of 10% off the purchase price. Shipping costs from the supplier's warehouse
amount to $50 per 100 pounds the chemical. Each unit requires 2.5 pounds of the chemical. The
allowance for waste and spoilage Is .10 pounds for each unit of output. The allowance for rejects
Is .2 pounds for each unit of output.
Solution
* Per Unit of the Output:
> Chemical required - 2.5 pounds
Add :- spoilage - 0.1 pounds
rejects - 0.2 pounds
Total - 2.80 pounds per unit of Output
> Transportation cost (purchase) - $50/100 pounds = $ 0.50 per pound
> Purchase cost of chemical - $ 20 - 10 % discount = $ 18 per pound
* Standard Cost of Material per unit of Output - 2.80 pound @ $18.50 per pound = $ 51.80