TWO PART QUESTION
Ozark 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 13 quarts of triphate solution and 3 pounds of sobase granules and boiling the mixture for several minutes. After the solution has cooled, 1 ounces of methage are added. This “recipe” produces 11 quarts of the cleaner, which is then packaged in one quart plastic dispenser bottles. Raw material costs are:
| Triphate solution |
$ |
0.28 |
per quart |
| Sobase granules |
|
0.79 |
per pound |
| Methage |
|
1.22 |
per ounce |
| Bottle |
|
0.24 |
each |
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Using the preceding data, calculate the raw material cost for one bottle of the new cleaner. (Do not round your intermediate calculations. Round final answer to 3 decimal places. Omit the “$” sign in your response.)
Osage Inc., has actual sales for June and July and forecast sales for August, September, October, and November as follows:
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|
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| Actual: |
|
|
| June |
5,910 |
units |
| July |
6,260 |
units |
| Forecasted: |
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| August |
5,970 |
units |
| September |
6,860 |
units |
| October |
5,690 |
units |
| November |
5,390 |
units |
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| Required: |
| (a) |
The firm%u2019s policy is to have finished goods inventory on hand at the end of the month that is equal to 55% of the next month%u2019s sales. It is currently estimated that there will be 4,080 units on hand at the end of July. Calculate the number of units to be produced in each of the months of August, September, and October. (Round your answers to nearest whole number.)
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August |
September |
October |
| Production |
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| (b) |
Each unit of finished product requires 6 pounds of raw materials. The firm%u2019s policy is to have raw material inventory on hand at the end of each month that is equal to 65% of the next month%u2019s estimated usage. It is currently estimated that 25,800 pounds of raw materials will be on hand at the end of July. Calculate the number of pounds of raw materials to be purchased in each of the months of August and September. (Round your answers to nearest whole number.)
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August |
September |
| Purchases |
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