A company makes concrete statues. Each statue requires 10 pounds of concrete at $2 per pound and 0.2 direct labor hours at $30 per hour. Overhead is assigned at the rate of $80 per labor hour. What is the standard cost to make one unit and the total that would appear on the standard cost card?

the standard cost to make one unit is  $42

Explanation:

Standard Costing is the Cost established from the firm`s Past experience.

Standard Costing Calculation for Concrete statues

Material

Concrete (10 pounds×$2)                                $20

Labor

Direct Labor( 0.2 direct labor hours × $30)     $6

Overheads

Allocated ($80×0.2 direct labor hours)          $16

Total                                                                  $42

Liquid soap

B. The liquid soap would be chosen because its pay back period is shorter than that of the body lotion.

even though both projects have the same total cash flows, the liquid soap project has greater cash flows in the ealier years compared to the other project. This makes the amount invested to be recovered more quickly and this makes it more desirable.

Explanation:

Cash payback period measures how long it takes for the amount invested in a project to be recovered from the cumulative cash flow.

Cash payback for the liquid soap.

Amount invested = $-540,000

In the first year , the amount recovered = $- 540,000 + $170,000 = $-370,000

In the second year , the amount recovered = $-370,000 + 150,000  = $-220,000

In the third year , the amount recovered = $- 220,000 + 120,000 =$ -100,000

In the 4th year, the amount recovered = $ -100,000 + $100,000 =0

The total amount invested is recovered In the 4th year

Cash payback period for the body option =

Amount invested / net cash flows

$540,000 / $90,000 = 6 years

The amount invested is recovered In the 6th year

The liquid soap would be chosen because its pay back period is shorter than that of the body lotion.

even though both projects have the same total cash flows, the liquid soap project has greater cash flows in the ealier years compared to the other project. This makes the amount invested to be recovered more quickly and this makes it more desirable.

I hope my answer helps you