Sustainability and job costing (Learning Objectives 2, 3, & 4) SUSTAINABILITY Lancaster Plastics manufactures custom park furniture and signage from recycled plastics (primarily shredded milk jugs). Many of the company’s customers are municipalities that are required by law to purchase goods that meet certain recycled-content guidelines. (Recycled content can include post-consumer waste materials, pre-consumer waste materials, and recovered materials). As a result, Lancaster Plastics includes two types of direct material charges in its job cost for each job: (1) virgin materials (non-recycled), and (2) recycled-content materials. Lancaster Plastics also keeps track of the pounds of each type of direct material so that the final recycled-content percentage for the job can be reported to the customer. The company also reports on the percentage of recycled-content as a total of plastics used each month on its own internal reporting system to help encourage managers to use recycled content whenever possible. Lancaster Plastics uses a predetermined manufacturing overhead rate of $8 per direct labor hour. Here is a summary of the materials and labor used on a recent job for Lyon County: Description Quantity Cost Virgin materials 80 Pounds $ 3.80 per pound Recycled content material 120 Pounds $ 2.60 per pound Direct labor 12 hours $ 16.00 per hour Requirements 1. Calculate the total cost of the Lyon County job. 2. Calculate the percentage of recycled-content used in the Lyon County job (using pounds.) If items purchased by Lyon County are required by county charter to contain at least 40% recycled-content, does the job meet that requirement?
Sustainability and job costing (Learning Objectives 2, 3, & 4) SUSTAINABILITY Lancaster Plastics manufactures custom park furniture and signage from recycled plastics (primarily shredded milk jugs). Many of the company’s customers are municipalities that are required by law to purchase goods that meet certain recycled-content guidelines. (Recycled content can include post-consumer waste materials, pre-consumer waste materials, and recovered materials). As a result, Lancaster Plastics includes two types of direct material charges in its job cost for each job: (1) virgin materials (non-recycled), and (2) recycled-content materials. Lancaster Plastics also keeps track of the pounds of each type of direct material so that the final recycled-content percentage for the job can be reported to the customer. The company also reports on the percentage of recycled-content as a total of plastics used each month on its own internal reporting system to help encourage managers to use recycled content whenever possible. Lancaster Plastics uses a predetermined manufacturing overhead rate of $8 per direct labor hour. Here is a summary of the materials and labor used on a recent job for Lyon County: Description Quantity Cost Virgin materials 80 Pounds $ 3.80 per pound Recycled content material 120 Pounds $ 2.60 per pound Direct labor 12 hours $ 16.00 per hour Requirements 1. Calculate the total cost of the Lyon County job. 2. Calculate the percentage of recycled-content used in the Lyon County job (using pounds.) If items purchased by Lyon County are required by county charter to contain at least 40% recycled-content, does the job meet that requirement?
Solution Summary: The author calculates the total cost of the LC job by summing direct material, direct labor, and manufacturing overhead costs.
Sustainability and job costing(Learning Objectives 2, 3, & 4)
SUSTAINABILITY
Lancaster Plastics manufactures custom park furniture and signage from recycled plastics (primarily shredded milk jugs). Many of the company’s customers are municipalities that are required by law to purchase goods that meet certain recycled-content guidelines. (Recycled content can include post-consumer waste materials, pre-consumer waste materials, and recovered materials). As a result, Lancaster Plastics includes two types of direct material charges in its job cost for each job: (1) virgin materials (non-recycled), and (2) recycled-content materials. Lancaster Plastics also keeps track of the pounds of each type of direct material so that the final recycled-content percentage for the job can be reported to the customer. The company also reports on the percentage of recycled-content as a total of plastics used each month on its own internal reporting system to help encourage managers to use recycled content whenever possible.
Lancaster Plastics uses a predetermined manufacturing overhead rate of $8 per direct labor hour. Here is a summary of the materials and labor used on a recent job for Lyon County:
Description
Quantity
Cost
Virgin materials
80 Pounds
$ 3.80 per pound
Recycled content material
120 Pounds
$ 2.60 per pound
Direct labor
12 hours
$ 16.00 per hour
Requirements
1. Calculate the total cost of the Lyon County job.
2. Calculate the percentage of recycled-content used in the Lyon County job (using pounds.) If items purchased by Lyon County are required by county charter to contain at least 40% recycled-content, does the job meet that requirement?
Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.
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