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September 1, 2014

September 1, 2014

Posted by **Pam** on Sunday, December 17, 2006 at 9:52pm.

You are a production manager for a pill manufacturer. You must get the materials for a production run. The order calls for 10,000 pills. The materials to go inside the 10,000 pills cost a total of $500.00. A box of 5000 empty capsules costs $100.00. The pills are to be packaged in bottles of 100 capsules each. The bottles cost $0.50 each. The cost of manufacturing 1000 pills is $10.00. What should you report to your boss is the cost of each bottle of 100 pills?

Each empty capsule costs $100/5000 = 0.02. This is $2.00 per 100 pills.

Each empty pill bottle costs 0.50 each

The contents of each capsule cost $500/10,000 = 0.05, which amounts to $5.00 per 100 pills.

The manufacturing cost is $1.00 per 100 pills

The cost of making a bottle of 100 capsules is therefore

$2.00 + $0.50 + $5.00 + $1.00 = ?

Check my thinking and verify the numbers.

8.5??

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