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Analyze Dura-Conduit Corporation's process costs Dura-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 for 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: June 600,000 x $1.05 Resin pounds input into the process Price per pound Plastic material costs Conversion costs Conduit output from the process (feet) May June Assume that there is one-half pound of resin per foot of the finished product. a. Determine the resin materials cost per foot of finished product for each month. Round to the nearest whole cent. per foot per foot July per foot b. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal place. May June July 640,000 x $1.05 July May 460,000 x $1.05 $483,000 $630,000 $672,000 $90,000 $110,000 $112,000 900,000 1,100,000 1,120,000 0.0.0
eBook Print nem b. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal place. May June July c. Interpret the resin materials cost per foot for the three months. Use the information in (a) and (b) to explain what is happening. 1. The resin materials cost per foot of finished product is increasing over the three months; this is not the result of a change in the price, rather, it is the result of the rati of output pounds to input pounds deteriorating. % 2. The resin materials cost per foot of finished product is decreasing over the three months; this is not the result of a change in the price, rather, it is the result of the ratio of output pounds to input pounds improving. 3. The resin materials cost per foot of finished product is increasing over the three months; this is the result of a change in the price and the ratio of output pounds to input pounds improving. 4. The resin materials cost per foot of finished product is increasing over the three months; this is the result of a change in the price and the ratio of output pounds to input pounds deteriorating. d. Determine the conversion cost per foot of finished product for each month and interpret the result. per foot per foot July per foot The conversion cost per foot has) May June Check My Work and thus, appear to need management attention. Previous Next >