Question

Rambo-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process of making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant:
May June July
Resin pounds input into the process 470,000 700000 650,000
Price per pound x81.50 x81.50 x81.50
Plastic material costs 493,000 6,40,000 6,77,000
Conversion costs 80,000 120,000 115000
Conduit output 800,000 1200,000 1130,000
from the process (feet)
Assuming that there is one-half pound of resin per foot of the finished product, determine the resin materials cost per foot of finished product for June.
a. $0.53
b. $0.60
c. $0.54
d. None of these choices are correct.

Answer 1

Answer: a. $0.53

Explanation:

Material Cost per foot of finished product = Material Cost/ Number of feet produced in June

Plastic Material Cost in June= $640,000

Number of Feet produced in June = 1,200,000

Material cost per foot of finished product

= 640,000/ 1,200,000

= $0.53