South Atlantic Chemical Company manufactures industrial chemicals in Rio de Jane

Question

South Atlantic Chemical Company manufactures industrial chemicals in Rio de Janeiro, Brazil. The company plans to introduce a new chemical solution and needs to develop a standard product cost. The new chemical solution is made by combining a chemical compound (nyclyn) and a solution (salex), heating the mixture, adding a second compound (protet), and bottling the resulting solution in 19-liter containers. The initial mix, which is 20 liters in volume, consists of 21 kilograms of nyclyn and 18.6 liters of salex. A 1-liter reduction in volume occurs during the boiling process. The solution is cooled slightly before 24 kilograms of protet are added. The addition of protet does not affect the total liquid volume. The purchase price of the direct materials used in the manufacture of this new chemical solution are given below. (The real abbreviated RS, is Brazil's national currency. On the day this problem was written, one real was equivalent to 0.320 U.S. dollar.) Nyclyn Salex Protet R$6.25 per kilogram R$7.30 per liter R$9.10 per kilogram Required: Determine the standard material cost of a 19-liter container of the new product. (Round your answer to 2 decimal places.) Standard material cost

Explanation / Answer

Standard material cost = $ 485.43 real Workings: Direct material Initial Mix (a) Unit Cost (b) (real) Standard material cost [(a) X (b)] (real) Nyclyn 21 kilograms $6.25 $131.25 Salex 18.6 liters $7.30 $135.78 Protet 24 kilograms $9.10 $218.40 Standard material cost $485.43

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