Rambo-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 of 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:
May June July
Resin pounds input into the process 470,000 700,000 650,000
Price per pound X$1.50 X$1.50 X$1.50
Plastic material costs $493,000 $640,000 $677,000
Conversion costs $80,000 $120,000 $115,000
Conduit output from the process (feet) 800,000 1,200,000 1,130,000
Assuming that there is one-half pound of resin per foot of the finished product, determine the resin materials cost per foot of finished product for June.
a. $0.53
b. $0.60
c. $0.54
d. None of these choices are correct.

Answer:

The resin materials cost per foot of finished product for June is $0.53

Option a) $0.53 is the right answer

Step-by-step explanation:  

Given the data in the question;

                                                       May                  June                          uly

Resin pounds input

into the process                        470,000            700,000                 650,000  

Price per pound                         X$1.50               X$1.50                    X$1.50

Plastic material costs             $493,000         $640,000                 $677,000

Conversion costs                    $80,000           $120,000                 $115,000

Conduit output from

the process (feet)                   800,000           1,200,000                 1,130,000

Assuming that there is one-half pound of resin per foot of the finished product, determine the resin materials cost per foot of finished product for June.

Now;  

Materials cost for June = $640,000

Number of Feet produced as output in June =  1,200,000    

so

Material Cost per feet of finished product will be;

= $640,000 / 1,200,000

= $0.5333 ≈ $0.53

Therefore, the resin materials cost per foot of finished product for June is $0.53

Option a) $0.53 is the right answer

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