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Determine standard quantity for each of the raw materials

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Reference no: EM131876369

Problem - Danson Company is a chemical manufacturer that supplies various products to industrial users. The company plans to introduce a new chemical solution, called Nysap, for which it needs to develop a standard product cost. The following information is available on the production of Nysap:

a. Nysap is made by combining a chemical compound (nyclyn) and a solution (salex), and boiling the mixture. A 20% loss in volume occurs for both the salex and the nyclyn during boiling. After boiling, the mixture consists of 13.6 liters of salex and 13 kilograms of nyclyn per 14-liter batch of Nysap.

b. After the boiling process is complete, the solution is cooled slightly before 6 kilograms of protet are added per 14-liter batch of Nysap. The addition of the protet does not affect the total liquid volume. The resulting solution is then bottled in 14-liter containers.

c. The finished product is highly unstable, and one 14-liter batch out of 5 is rejected at final inspection.  Rejected batches have no commercial value and are thrown out.

d. It takes a worker 20 minutes to process one 14-liter batch of Nysap. Employees work an 8-hour day, including 1 hour per day for rest breaks, and cleanup.

Requirement 1: Determine the standard quantity for each of the raw materials needed to produce an acceptable 14-liter batch of Nysap.

Requirement 2: Determine the standard labor time allowed to produce an acceptable 14-liter batch of Nysap.

Requirement 3: Assuming the following costs, prepare a standard cost card for direct materials and direct labor for one acceptable 14-liter batch of Nysap:

Salex - $5 per liter

Nyclyn - $4 per kilogram

Protet - $2 per kilogram

Direct labor cost - $14 per hour

Prepare a standard cost card for direct materials and direct labor for one acceptable 14-liter batch of Nysap.

Reference no: EM131876369

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