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Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will be 100,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor.

Required:
Compute the estimates for a standard cost.

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Answer:

Unitary cost= $14

Explanation:

Giving the following information:

Production= 100,000

To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor.

First, we need to calculate the total cost and then the unitary cost:

Total cost= 600,000 + 800,000= $1,400,000

Unitary cost= 1,400,000/100,000= $14

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