Silven Industries, which manufactures and sells summer lotions and insect repellents, has decided to diversify...
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Accounting
Silven Industries, which manufactures and sells summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin.
After considerable research, Silven developed a new lip balm called ChapOff that is sold to wholesalers in boxes of tubes for $ per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce ChapOff. However. a $ charge for fixed manufacturing overhead will be absorbed by the product under the company's absorption costing system.
Using estimated sales and production of boxes of ChapOff, the Actounting Department developed the following manufacturing cost per box:
tableDirect material,$
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