Chapter 3, Problem 1MAD

Dura-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 for 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:

Assume that there is one-half pound of resin per foot of the finished product.

1. a. Determine the resin materials cost per foot of finished product for each month. Round to the nearest whole cent.
2. b. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal place.
3. c. Interpret the resin materials cost per foot for the three months. Use the information in (a) and (b) to explain what is happening.
4. d. Determine the conversion cost per foot of finished product for each month and interpret the result.