50.1K

Verified Solution

Link Copied!

Empire Polymer Development produces three products using three different continuous processes. The products are Yarex, Darol, and Norex. Projected sales in gallons for the three products for the years $20$x$2$ and $20$x$3$ are as follows: $20$x$220$x$3$ Yarex $131,000141,000$ Darol $91,00081,000$ Norex $61,00071,000$ Inventories are planned for each product so that the projected finished$-$goods inventory at the beginning of each year is equal to $7$ percent of that year$$s projected sales. Because of the continuous nature of Empire$$s processes, work$-$in$-$process inventory for each of the products remains constant throughout the year. The raw$-$material requirements of the three products are shown in the following chart. Raw Material Units Unit Price Yarex Darol Norex Gamma pounds $ $11\mathrm{.}000\mathrm{.}30\mathrm{.}50$ Murad pounds $9\mathrm{.}000\mathrm{.}500\mathrm{.}6$ Islin gallons $5\mathrm{.}001\mathrm{.}10\mathrm{.}80\mathrm{.}6$ Tarden gallons $13\mathrm{.}0000\mathrm{.}40\mathrm{.}6$ Raw$-$material inventories are planned so that each raw material$$s projected inventory at the beginning of a year is equal to $10$ percent of the previous year$$s usage of that raw material. The conversion requirements in hours per gallon for the three products are Yarex, $0\mathrm{.}05$ hour; Darol, $0\mathrm{.}08$ hour; and Norex, $0\mathrm{.}14$ hour. The conversion cost of $$10$ per hour is considered $100$ percent variable. Required: $1.$ Determine Empire Polymer Development's production budget $($in gallons$)$ for the three products for $20$x$2.2.$ Determine Empire Polymer Development's conversion cost budget for $20$x$2.3.$ Assuming the $20$x$1$ usage of Islin is $265,000$ gallons, determine the company$$s raw$-$material purchases budget $($in dollars$)$ for Islin for $20$x$2.4-$a$.$ Assume that for $20$x$2$ production, Empire Polymer Development's could replace the raw material Islin with the raw material Philin. The usage of Philin would be the same as the usage of Islin. However, Philin would cost $20$ percent more than Islin and would cut production times on all three products by $10$ percent. Compare cost of using Philin over using Islin. $4-$b$.$ Which raw material should the management use for the $20$x$2$ production?

Answer & Explanation Solved by verified expert

See Answer