Lawrence Plastics manufactures custom park furniture and signage from recycled plastics (primarily shredded milk jugs). Many of the company’s customers are municipalities that are required by law to purchase goods that meet certain recycled-content guidelines. (Recycled-content can include post-consumer waste materials, pre-consumer waste materials, and recovered materials). As a result, Lawrence includes two types of direct material charges in its job cost for each job: (1) virgin materials (non-recycled), and (2) recycled-content materials. Lawrence also keeps track of the pounds of each type of direct material so that the final recycled-content percentage for the job can be reported to the customer. Lawrence also reports on the percentage of recycled content as a total of total plastic used each month in its own internal reporting system to help encourage managers to use recycled content whenever possible. Lawrence Plastics uses a predetermined manufacturing overhead rate of $14 per direct labor hour. Here is a summary of the materials and labor used on a recent job for Summit County:
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Lawrence Plastics manufactures custom park furniture and signage from recycled plastics (primarily s...
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