Vidriera Monterrey is analyzing a proposal from a new client to purchase its engraved vases for $75.00.
Question:
Vidriera Monterrey is analyzing a proposal from a new client to purchase its engraved vases for $75.00. The Commercial Director has asked us for support in making this decision and provides us with the following information:
Mixing Department:
In this department, the glass chips are mixed with silica sand to generate a compound that will later be passed to the Furnace to be melted.
At the beginning of the month, the mixing process had an initial inventory of 70Kg. Mixing at 30% progress composed of 50kg of scrap and 20Kg. Of sand.
At the beginning of the month, 300 kg of scrap were entered with a total cost of $3,600.
At 20% progress of the process, 130 kg were added. Sand with a total cost of $6,500.
During the month, $3,031 was paid in labor.
There was a final inventory at 40% progress of 50 kg. And another final inventory at 90% progress of 60 kg.
At 80% progress the inspector detected 30 kg. Waste considered normal, but at 95% progress another waste of 80 kg was detected. Considered-abnormal.
Baking Department:
The kg. of mixture from the previous department are introduced into the Oven, where the flourishes are melted and molded.
The conversion cost of the process in the month was $5,400 and it is known that for each kg. 3 vases come out of the mixture.
The price of an undecorated vase is $60.00
The vase can continue processing when moving to the Decorating department.
Decoration Department.
In this department, the vase is decorated with a sticker that is incorporated at 30% of the process, at 60% a label is added and at 95% it is placed in a box.
The costs for stickers were $1,680, labels were $340 and boxes were $600; with a labor cost of $1,660.
The client's offer is to pay $75.00 per decorated vase.
At the beginning of the process, there was an inventory of 24 vases at 50% progress and at the end there were 20 vases at 40% progress and 40 vases at 90% progress. At 95% progress of the process, an Abnormal Waste of 30 vases.
Determine the total and unit cost of the vases.
What is more convenient for you, selling decorated or undecorated vases?