Danson Company is a chemical manufacturer that supplies various products to industrial users. The company plans to introduce a new chemical solution, called Nysap, for which it needs to develop a standard product cost. The following information is available on the production of Nysap:
a.Nysap is made by combining a chemical compound (nyclyn) and a solution (salex), and boiling the mixture. A 20% loss in volume occurs for both the salex and the nyclyn during boiling. After boiling, the mixture consists of 16.6 liters of salex and 11 kilograms of nyclyn per 17-liter batch of Nysap.
b.After the boiling process is complete, the solution is cooled slightly before 7 kilograms of protet are added per 17-liter batch of Nysap. The addition of the protet does not affect the total liquid volume. The resulting solution is then bottled in 17-liter containers.
c.The finished product is highly unstable, and one 17-liter batch out of 5 is rejected at final inspection. Rejected batches have no commercial value and are thrown out.
d. It takes a worker 30 minutes to process one 17-liter batch of Nysap. Employees work an 8-hour day, including 1 hour per day for rest breaks, and cleanup.