A cost analyst for Stamper Manufacturing Co. has assembled the following data about the Model 24 stamp pad:
The piece of sheet metal from which 7 pad cases can be made costs $0.13.
This amount is based on the number of sheets in a 4,300-pound bundle of sheet metal, which is the usual purchase quantity.
The foam pad that is put in the case costs $0.03, based on the number of pads that can be cut from a large roll of foam.
Production standards, based on engineering analysis recognizing attainable performance, provide for the manufacture of 1,970 pads by 5 workers in an eight-hour shift. The standard direct labor pay rate is $9.7 per hour.
Manufacturing overhead is applied to units produced using a predetermined overhead application rate of $16 per direct labor hour, of which $9.65 per hour is fixed manufacturing overhead.
Required:
(a) Calculate the standard absorption cost of a package of 14 stamp pads. (Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)
Standard absorption cost per package $ 7.98 (I know how to do this)
(b) Stamper Manufacturing Co.'s management is considering a special promotion that would result in increased sales of 1,700 packages of 14 pads per package. Calculate the cost per package that is relevant for this analysis. (Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)