The total capital investment for a conventional chemical plant is $1,500,000 and the plant produces 3 million kg of product annually
The total capital investment for a conventional chemical plant is $1,500,000 and the plant
produces 3 million kg of product annually. The selling price of the product is $0.82/kg.
Working capital amounts to 15% of the total capital investment. The investment is from
company funds and no interest is charged. Delivered raw materials costs for the product
are $0.09/kg; Labor, $0.08/kg; utilities, $0.05/kg and packaging, $0.008/kg. Distribution
costs are 5% of the total product cost. Estimate a) the manufacturing cost per kg of
product; (b) total product cost per year; (c) Profit per kg of product before taxes and (d)
profit per kg of product after income taxes at 35% of gross profit.
