Question - Product Costing
In the text you used accounting data on DuPont's Kevlar product line to determine the total manufacturing cost to produce a pound of Kevlar. Similar data on DuPont's Teflon product line are provided below.
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60.00 per gallon
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.80 per gallon
Manufacturing overhead:
Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.20 per gallon
Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,200,000 per month
General corporate sales and administrative costs . . . . . . . . . . . . . . . . . $6,400,000 per month
Following the same costing procedure as was used with the Kevlar product line, and assuming that DuPont expects to produce 100,000 gallons in the next month, what appears to be the total manufacturing cost per gallon of Teflon?