AgroTech Industries manufactures PestShield. Each bag of the product contains 60 pounds of direct materials. 15% of the materials evaporate during manufacturing. The budget allows direct materials to be purchased at $4.80 per pound under terms of 3/15, n/45. The company's stated policy is to take all available cash discounts. Determine the standard direct materials cost for one bag of PestShield.

AgroTech Industries manufactures PestShield. Each bag of the product contains 60 pounds of direct materials. 15% of the materials evaporate during manufacturing. The budget allows direct materials to be purchased at $4.80 per pound under terms of 3/15, n/45. The company's stated policy is to take all available cash discounts. Determine the standard direct materials cost for one bag of PestShield.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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9. Agrichem manufactures Insect-Be-Gone. Each bag of the product contains 60 pounds of direct materials. Twenty-five percent of the materials evaporate during manufacturing. The budget allows the direct materials to be purchased at $2.50 per pound (gross cost) under terms of 2/10, n/30. The company’s stated policy is to take all available cash discounts. Required: Determine the standard direct materials cost for one bag of Insect-Be-Gone. (Do not round intermediate calculations.)
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