Pitman Chemical Company manufactures and sells Goody, a productthat sells for $1
ID: 2433747 • Letter: P
Question
Pitman Chemical Company manufactures and sells Goody, a productthat sells for $10 per pound. The manufacturing process also yields1 pound of a waste product, called Baddy, in the production ofevery 10 pounds of Goody. Disposal of the waste product costs $1per pound. During March, the company manufactured 200,000 pounds ofGoody. Total manufacturing cots were as follows:
Directmaterials $232,000
Directlabor 120,000
Manufacturing supportcost 60,000
Totalcosts $412,000
Explanation / Answer
Cost Per Pound
Total Cost
200,000
20,000
$1.16
$232,000
$0.60
$120,000
$0.30
$60,000
$0.10
$20,000
$2.16
$432,000
Cost Per Pound
Total Cost
Goody Production (Pounds)200,000
Baddy (pounds) 200,000 / 1020,000
Direct Materials$1.16
$232,000
Direct labor$0.60
$120,000
Manufacturing Support cost$0.30
$60,000
Disposal Cost of Waste produced$0.10
$20,000
TotalCost$2.16
$432,000