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    Standard Cost Card

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    Svenska Pharmicia, a Swedish pharmaceutical company, makes an anticoagulant drug. The main ingredient in the drug is a raw material called Alpha SR40. Information concering the purchase and use of Alpha SR40 follows:

    Purchase of Alpha SR40: The raw material Alpha SR40 is purchased in 2-kilogram containers at a cost of 3,000 Kr per kilogram. (The Swedish currentcy is the krona, which is abbreviated as Kr.) A discount of 2% is offered by the supplier for payment within 10 days and Svenska Pharmicia takes all discounts. Shipping costs, which Svenska Pharmicia must pay, amount to 1,000 Kr for an average shpment of ten 2-kilogram containers.

    Use of Alpha SR40: The bill of materials calls for 6 grams of Alpha SR40 per capsule of the anticoagulant drug. (A kilogram equals 1,000 grams.) About 4% of all Alpha SR40 purchased is rejected as unsuitable before being used to make the anticoagulant drug. In addition, after the addition of Alpha SR40, about 1 out of every 26 capsules is rejected at final inspection due to defects of one sort or anotehr in the capsule.

    Computer the standard purchase price for one gram of Alpha SR40
    Computer the standard quantity of Alpha SR40 (in grams) per capsule that passes final inspection. (Carry computations to two decimal places.)
    Using the data from (1) and (2) above, prepare a standard cost card showing the standard cost of Alpha SR40 per capsule of the anticoagulant drug.

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    Solution Summary

    Excel file shows calculations of standard purchase price for one gram of raw material , the standard quantity of raw material per unit and standard cost card.