Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process for making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process.

Information from the cost of production reports for three months is as follows, assuming that inventory remains constant:

	May	June	July
Resin pounds input into the process	460,000	600,000	640,000
Price per pound	$1.05	$1.05	$1.05
Plastic material costs	$483,000	$630,000	$672,000
Conversion costs	$90,000	$110,000	$112,000
Conduit output from the process (feet)	900,000	1,100,000	1,120,000

Assume that there is one-half pound of resin per foot of the finished product.

a. Determine the resin materials cost per foot of finished product for each month. Round to the nearest whole cent.

May	$ per foot
June	$ per foot
July	$ per foot

b. Determine the ratio of the number of resin pounds output in conduit by the number of pounds input into the process for each month. Round percentages to one decimal place.

May	%
June	%
July	%

c. Interpret the resin materials cost per foot for the three months. Use the information in (a) and (b) to explain what is happening.

1. The resin materials cost per foot of finished product is increasing over the three months; this is not the result of a change in the price, rather, it is the result of the ratio of output pounds to input pounds deteriorating.

2. The resin materials cost per foot of finished product is decreasing over the three months; this is not the result of a change in the price, rather, it is the result of the ratio of output pounds to input pounds improving.

3. The resin materials cost per foot of finished product is increasing over the three months; this is the result of a change in the price and the ratio of output pounds to input pounds improving.

4. The resin materials cost per foot of finished product is increasing over the three months; this is the result of a change in the price and the ratio of output pounds to input pounds deteriorating.

d. Determine the conversion cost per foot of finished product for each month and interpret the result.

May	per foot
June	$ per foot
July	$ per foot

The conversion cost per foot has remained constant and thus, does not appear to need management attention.