Hampton Corporation 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 7.2 liters of salex and 14.0 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 protet are added per 10-liter batch of Nysap. The addition of the protet 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 an eight-hour day, including one hour per day for rest breaks and cleanup.
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 to produce an acceptable 10-liter batch of Nysap.
3. Assuming the following purchase prices and costs, prepare a standard cost card for materials and labor for one acceptable 10-liter batch of Nysap:
Salex $1.75 per liter
Nyclyn $2.90 per kilogram
Protet $2.80 per kilogram
Direct labor cost $8.90 per hour
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