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 9.6 liters of salex and 12 kilograms of nyclyn per 10 liter batch of Nysap.
(b) After the boiling process is complete, the solution is cooled slightly before 5 kilograms of protect are added per 10 liter batch of Nysap. The addition of the protect does not affect the total liquid volume. The resulting solution is then bottled in 10 liter containers.
(c) The finished product is highly unstable, and one 10 liter batch out of five is rejected at final inspection. Rejected batches have no commercial value and are thrown out.
(d) It takes a worker 35 minutes to process one 10 liter batch of Nysap. Employees work eight hour day, including one hour per day for rest breaks and cleanup.
Required:
1. Determine the standard quantity for each of the raw materials needed to produce an acceptable 10 liter batch of Nysap.
2. Determine the standard labor time allowed to produce an acceptable 10 liter batch of Nysap.
3.Assuming the following costs, prepare a standard cost card for direct materials and direct labor for one acceptable 10 liter batch ofNysap:
