Management account and control

9. ABC makes an anticoagulant drug. The main ingredient in the drug is a raw material called Panadol. Information concerning the purchase and use of Panadol follows: Purchase of Panadol: The raw material Panadol is purchased in 2-kilogram containers at a cost of 1000 OMR per kilogram. A discount of 1% is offered by the supplier for payment within 10 days and ABC takes all discounts. Shipping costs, which ABC must pay, amount to 500 OMR for an average shipment of ten 2-kilogram containers. Use of Panadol: The bill of materials calls for 9 grams of Panadol per capsule of the anticoagulant drug. (A kilogram equals 1,000 grams.) About 3% of all Panadol purchased is rejected as unsuitable before being used to make the anticoagulant drug. In addition, after the addition of Panadol, about 1 out of every 30 capsules is rejected at final inspection, due to defects of one sort or another in the capsule. Required: 1. Compute the standard purchase price for one gram of Panadol. (2 marks) 2. Compute the standard quantity of Panadol (in grams) per capsule that passes final inspection. (Carry computations to two decimal places.) (2 marks) 3. Using the data from (1) and (2) above, prepare a standard cost card showing the standard cost of Panadol per capsule of the anticoagulant drug