Tick Tock, Ltd., assembles clock movements for grandfather clocks. Each movement has four components: the clock facing, the clock hands, the time movement and the spring assembly. For the current year, the company used the following standard costs: clock facing, $15.90; clock hands, $12.70; time movement, $66.10; and spring assembly, $52.50.
Prices of materials are expected to change next year. Tick Toc will purchase 60 percent of the facings form Company A at $18.50 each and the other 40 percent from company B at $18.80 each. The clock hands, which are produced for Tick Tock by Hardware, Inc., will cost $15.50 per set next year. Tick Tock will purchase 30 percent of the time movements from Company Q at $68.50 each, 20 percent form Company R at $69.50 each, and 50 percent form Company S at $71.90 each. The manufacturer that supplies Tick Tock with spring assemblies has announced that it will increase its prices by 20 percent.
Required
1. Determine the total standard direct materials cost per unit for next year.
2. Suppose that because Tick Tock has guaranteed Hardware, Inc., that it will purchase 2,500 sets of clock hands next year, the cost of a set of clock hands has been reduced by 20 percent. Find the standard direct materials cost per clock.