. A production manager is concerned with the cost the company incurred in the recent undertaking of a project (Project 102). He compares the projects costs to another project that produced the same number of products in the previous month. Use the information to determine the following:

a. Why did the new project have a higher cost per finished good?

b. What could be the cause of the higher cost per finished good?

Project 102

Cost per Unit Units Job Cost Direct materials: Chemical A $4/gallon 200 gallons $ 800 Chemical B 2/gallon 490 gallons 980 Production labor 10/hour 15 hours 150 Research labor 14/hour 22 hours 308 Factory overhead 10/hour 37 hours 370

$2,608 Products produced 200 Cost per finished good $13.04

Project 50

Cost per Unit Units Job Cost

Direct materials: Chemical A $3/gallon 200 gallons $ 600.00 Chemical B 1.75/gallon 490 gallons 857.50 Production labor 10/hour 16 hours 160.00 Research labor 14/hour 21 hours 294.00 Factory overhead 10/hour 36 hours 360.00

$2,271.50 Products produced 200 Cost per finished good $ 11.36