Analyzing unit costs Midstate Containers Inc. manufactures cans for the canned food industry. The operations manager of a can manufacturing operation wants to conduct a cost study investigating the relationship of tin content in the material (can stock) to the energy cost for enameling the cans. The enameling was necessary to prepare the cans for labeling. A higher percentage of tin content in the can stock increases the cost of material. The operations manager believed that a higher tin content in the can stock would reduce the amount of energy used in enameling. During the analysis period, the amount of tin content in the steel can stock was increased for every month, from April to September. The following operating reports were available from the controller:

Energy Materials Total cost Units produced Cost per unit

$ 14,000 13,000

$ 27,000 50,000

$ 0.54

$ 34,800 28,800

$ 63,600 120,000

$ 0.53

$ 33,000 24,200

$ 57,200 110,000

$ 0.52

$ 21,700 14,000

$ 35,700 70,000

$ 0.51

$ 28,800 17,100

$ 45,900 90,000

$ 0.51

$ 33,000 16,000

$ 49,000 100,000

$ 0.49 April May June July August September A B C D E F G Differences in materials unit costs were entirely related to the amount of tin content.

Interpret this information and report to the operations manager your recommendations with respect to tin content.