Aarong pharma, a petrochemical company in India , generates pesticide that sells for $249 per kilolitre. The
Question:
Aarong pharma, a petrochemical company in India, generates pesticide that sells for $249 per kilolitre. The company’s capacity is 155 kilolitres a day as it operates six days a week, 24 hours a day.
The unit price for Boric Acid is $0.15 per liter. About 0.09 liter of Boric Acid is required for each liter of pesticide.
The fixed cost is $2800 a day and the average variable cost is $3.22 per kilolitre.
The management is considering Sunday operations as well. If the plant was to operate on Sunday, it is estimated that the variable cost of Sunday operation would be $35, and the total fixed cost per week would be increased by $560.
a) Evaluate the break-down volumes and the marginal contribution rates for
>Six-day operation
>Seven-day operation
b) What is the average total cost per kilolitre for six-day operation? Calculate the net profit margin per kilolitre before taxes.
c) Is it economical for this company to operate seven days a week?
Round your answers to two decimal places.
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins