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North Co manufactures a powerful cleaning solvent. The main ingredient in the solvent is a raw material called Echol. Information concerning the purchase and use of Echol follows: Purchase of Echol. Echol is purchased in 20-quart containers at a cost of $50 per container. A discount of 4% is offered by the supplier for payment within 10 days, and North Co takes all discounts. Shipping costs, which North Co must pay, amount to $400 for an average shipment of 100 20-quart containers of Echol. Use of Echol. The bill of materials calls for 18.0 quarts of Echol per bottle of cleaning solvent. About 10% of all Echol used is lost through spillage or evaporation (the 18.0 quarts above is the actual content per bottle). In addition, statistical analysis has shown that every 51st bottle is rejected at final inspection because of contamination. Please make sure your final answer(s) are accurate to 2 decimal places. a) Compute the standard purchase price for one quart of Echol. Standard purchase price = $ b) Compute the standard quantity of Echol (in quarts) per salable bottle of cleaning solvent. Standard quantity = quart per salable bottle c) Using the data from a) and b) above, prepare a standard cost card showing the standard cost of Echol per bottle of cleaning solvent. Standard Quantity Standard Price Standard Cost per Bottle Item Echol

North Co manufactures a powerful cleaning solvent. The main ingredient in the solvent is a raw material called Echol. Information concerning the purchase and use of Echol follows: Purchase of Echol. Echol is purchased in 20-quart containers at a cost of $50 per container. A discount of 4% is offered by the supplier for payment within 10 days, and North Co takes all discounts. Shipping costs, which North Co must pay, amount to $400 for an average shipment of 100 20-quart containers of Echol. Use of Echol. The bill of materials calls for 18.0 quarts of Echol per bottle of cleaning solvent. About 10% of all Echol used is lost through spillage or evaporation (the 18.0 quarts above is the actual content per bottle). In addition, statistical analysis has shown that every 51st bottle is rejected at final inspection because of contamination. Please make sure your final answer(s) are accurate to 2 decimal places. a) Compute the standard purchase price for one quart of Echol. Standard purchase price = $ b) Compute the standard quantity of Echol (in quarts) per salable bottle of cleaning solvent. Standard quantity = quart per salable bottle c) Using the data from a) and b) above, prepare a standard cost card showing the standard cost of Echol per bottle of cleaning solvent. Standard Quantity Standard Price Standard Cost per Bottle Item Echol

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 2CE: Kaune Food Products Company manufactures canned mixed nuts with an average manufacturing cost of 52...
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North Co manufactures a powerful cleaning solvent. The main ingredient in the solvent is a raw material called Echol. Information concerning the purchase and use of Echol follows: Purchase of Echol. Echol is purchased in 20-quart containers at a cost of $50 per container. A discount of 4% is offered by the supplier for payment within 10 days, and North Co takes all discounts. Shipping costs, which North Co must pay, amount to $400 for an average shipment of 100 20-quart containers of Echol. Use of Echol. The bill of materials calls for 18.0 quarts of Echol per bottle of cleaning solvent. About 10% of all Echol used is lost through spillage or evaporation (the 18.0 quarts above is the actual content per bottle). In addition, statistical analysis has shown that every 51st bottle is rejected at final inspection because of contamination. Please make sure your final answer(s) are accurate to 2 decimal places. a) Compute the standard purchase price for one quart of Echol. Standard purchase price = $ b) Compute the standard quantity of Echol (in quarts) per salable bottle of cleaning solvent. Standard quantity = quart per salable bottle c) Using the data from a) and b) above, prepare a standard cost card showing the standard cost of Echol per bottle of cleaning solvent. Item Standard Quantity Standard Price Standard Cost per Bottle Echol
Transcribed Image Text:North Co manufactures a powerful cleaning solvent. The main ingredient in the solvent is a raw material called Echol. Information concerning the purchase and use of Echol follows: Purchase of Echol. Echol is purchased in 20-quart containers at a cost of $50 per container. A discount of 4% is offered by the supplier for payment within 10 days, and North Co takes all discounts. Shipping costs, which North Co must pay, amount to $400 for an average shipment of 100 20-quart containers of Echol. Use of Echol. The bill of materials calls for 18.0 quarts of Echol per bottle of cleaning solvent. About 10% of all Echol used is lost through spillage or evaporation (the 18.0 quarts above is the actual content per bottle). In addition, statistical analysis has shown that every 51st bottle is rejected at final inspection because of contamination. Please make sure your final answer(s) are accurate to 2 decimal places. a) Compute the standard purchase price for one quart of Echol. Standard purchase price = $ b) Compute the standard quantity of Echol (in quarts) per salable bottle of cleaning solvent. Standard quantity = quart per salable bottle c) Using the data from a) and b) above, prepare a standard cost card showing the standard cost of Echol per bottle of cleaning solvent. Item Standard Quantity Standard Price Standard Cost per Bottle Echol
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