Fruit Snacks Corp Inc. makes lunchbox style fruit snacks. The owner of the company is setting up a standard cost system, and she collected the following data for one of the company’s products – fruit chews.
The data below pertain only to the fruits used in the product.
Material requirements, kilograms of fruit per dozen bags 0.95 kg
Allowance for waste, kilograms of fruit per dozen bags 0.06 kg
Allowance for rejects, kilograms of fruit per dozen bags 0.04
Purchase price, fruit $7.50/kg
Purchase discount 4% of purchase price
Shipping cost from supplier $0.30/kg
Receiving and handling cost handling cost $0.10/kg