Analysis For Current Tint Intermediate Essay

1343 Words Apr 11th, 2016 null Page
DBC Analysis for Current Tint Intermediate
The white tint intermediate, comprising close to 1000 gallons a year, is one of the largest volume tints manufactured and utilized by Elcho Paint Co. The DBC model for the white tint intermediate with a standard batch size is shown in Figure 2. The A margin level includes only costs related to raw materials and containers holding raw materials, which are generally included in product costs if they are from an outside supplier. The conversion costs for raw materials that contribute to the A margin given in Figure 2 are due to transaction costs. Intermediates, which are made internally, will each have a conversion cost due to labor involved with a container change (batch vessel to pails or drums) incurred for warehousing.
FIGURE 2 The B margin level costs include manufacturing costs and those costs related to fill-out and warehousing the finished goods or intermediates. Rates for each process are used to calculate conversion costs. These rates are determined in a variety of ways. For example, the “Batch Making” rate in units of mill hours is determined by using the total cost for milling, labor hours multiplied by wages of manpower in milling, and dividing by the average time required to finish the milling process. Each tint intermediate will have a different time requirement. The milling times are always recorded on the individual batch tickets. The “Batch Transaction” rate is a per batch rate. Overall cost for data…

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