Reference no: EM132718468
Ghielyn has decided to make a business out of her hobby of making "Pasti-Mallows". It is marshmallows covered with pastillas. When she started showing it to her friends, they liked it and always asked her to bring some stuff in the school to the point of her classmates asking her to bring some and they will pay P15 pesos each. It is at that time that she saw the opportunity. However, she is having a dilemma of whether the P15 selling price is right and one of her friends has told her to determine a standard cost for each unit of "Pasti-Mallows". She started computing the unit cost by recalling the procedures on how she is producing the products.
The following are the data she noted:
a. To produce 50 pcs., she buys 1 kilo of powder milk @ P200; 1 bag of marshmallows @ P30 (each bag contains 100 pcs.); 4 cans of condensed milk @ P45 each.
b. She can finish the 50 pcs. in two hours. Every time she does this she fails to go to her part-time job of which she earns P50 per hour.
c. She uses other stuff such as wrappers, some flavoring and packing that cost her around P40 all in all.
d. To please her mother, she pays her P50 for the use of their kitchen and other stuff such as gas, electricity and water for her production.
Problem 1: How do prepare the standard cost cards for materials, labor and overhead and determine the standard unit cost.