Calculate raw material cost for one bottle of new cleaner

Assignment Help Accounting Basics

Reference no: EM131896461

Problem

Lakeway Manufacturing Co. manufactures and sells household cleaning products. The company's research department has developed a new cleaner for which a standard cost must be determined. The new cleaner is made by mixing 7 quarts of triphate solution and 5 pounds of sobase granules and boiling the mixture for several minutes. After the solution has cooled, 4 ounces of methage are added. This "recipe" produces 6 quarts of the cleaner, which is then packaged in 1-quart plastic dispenser bottles. Raw material costs are as follows:

Triphate solution $ 0.30 per quart
Sobase granules 0.92 per pound
Methage 1.01 per ounce
Bottle 0.10 each

Required:

a. Using the preceding data, calculate the raw material cost for one bottle of the new cleaner.

b. Assume that the preceding costs are the current best estimates of the costs at which required quantities of the raw material can be purchased. What other factors would you recommend to be considered in establishing the raw material cost standard for the new cleaner?

Reference no: EM131896461

Questions Cloud

Determine the cost of serving the local commercial market : Prepare a report showing the margin earned serving the local commercial market. (Remember, this company has no direct materials or direct labor costs.)

Prepare summary journal entries dated october : Prepare summary journal entries dated October 31 to record its October production activities for (1) direct material usage, (2) direct labor incurred.

What is the total inventory-related cost at the eoq : Laird Company uses 405 units of a part each year. What is the economic order quantity (EOQ) for Laird? What is the total inventory-related cost at the EOQ?

Estimate the cash require to make purchases in june and july : Estimate purchases (in units) for June and July. Estimate the cash required to make purchases in June and July.

Calculate raw material cost for one bottle of new cleaner : Using the preceding data, calculate the raw material cost for one bottle of the new cleaner.

What are some pitfall of overmeasurement : What are some pitfall of overmeasurement? How do you determine what is important to measure in an organization?

What is the minimum cycle time for the cycle schedule : If Plainwell going to produce the parts using a cyclic schedule and it takes 2 hours change from one color is to the next.

Discuss how the application works : Planning is arguably the most important piece of project management. In planning the project, many companies, project managers, etc.

What was the variable overhead spending variance for month : Lafountaine Manufacturing Corporation has a standard cost system in which it applies. What was the variable overhead spending variance for the month?

User Account

All Pages