Chesapeake Chemical Company supplies primarily industrial users. Your superior has asked you to develop a standard product cost for a new solution the company plans to introduce.
The new chemical solution is made by combining altium and bollium, boiling the mixture, adding credix, and bottling the resulting solution in 20-liter containers. The initial mix, which is 20 liters in volume, consists of 24 kilograms of altium and 19.2 liters of bollium. A 20% reduction in volume occurs during the boiling process. The solution is then cooled slightly before adding 10 kilograms of credix to each 20-liter container; the addition of credix does not affect the total liquid volume.
The purchase prices of the raw materials used in the manufacture of this new chemical solution are as follows:
Altium $2.20 per kilogram
Bollium $4.60 per liter
Credix $3.20 per kilogram

Determine the standard quantity for each of the raw materials needed to produce 20 liters of Chesapeake Chemical Company’s new chemical solution and the total standard materials cost of 20 liters of the new product.

  • CreatedNovember 19, 2014
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