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Seth Technologies Manufactures Culture Mediums That Biotech and Pharmaceutical Research
Seth Technologies Manufactures Culture Mediums That Biotech and Pharmaceutical Research
Seth Technologies Manufactures Culture Mediums That Biotech and Pharmaceutical Research
Seth Technologies manufactures culture mediums that biotech and pharmaceutical research
labs use to grow viral and bacterial specimens. They have perfected a specialized culture,
PETR82 for a particular strain of bacteria. To produce the PETR82 culture requires three
chemical compounds: A213, D473, and F675. Seth held none of these three compounds prior
to manufacturing its first batch of PETR82. Before manufacturing PETR82, Seth purchased the
following quantities of each of the three chemical compounds:
Seth uses a standard cost system for both planning purposes and to assess the manufacturing
and purchasing managers' performance. The following data summarize the standard cost data
developed during the analysis of the decision to manufacture PETR82.
After producing the first batch of PETR82, the standard costing system reports the following
data:
Required:
a. Write a memo to management explaining what this report says, what they should learn from
this report, and its key takeaways.
b. Write a second memo to Seth senior management explaining what is good and/or bad in
Seth's use of standard costing as applied to the three chemicals used to produce PETRA82. In
particular, do you recommend any changes in their standard costing methodology?
Seth Technologies manufactures culture mediums that biotech and pharmaceutical research
ANSWER
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