Question

A manufactory makes particular plastics for sale. Basic cost data for a 100-pound drum of one particular product called Cent appears below: Qty Cost Chemical A, gals 15 $25.00 Chemical B, gals 35 $27.50 Base material, lbs 20 $1.00 100-lb lined drum 1 $51.83 Variable factory overheads are estimated to be $1,200,000 per month, when 1,000,000 pounds of various products are produced. The plant employs 20 chemical workers who typically work 175 hours each per month and are paid $24 per hour. Other workers are classified as indirect and are included in fixed overheads. The highly automated plant typically runs 21,000 machine hours per month. The preparation of one 100 lbs batch of Cent needs 10 minutes of direct labor and 75 minutes of machine time. Fixed manufacturing overheads total $3,500,000 per month. 40% of these fixed manufacturing overheads are labor-related costs and the balance are machine-related costs. An agency wants to purchase 200 drums of Cent at cost plus a flat fee. Please perform calculation on the allocating overhead per pound between direct labor hour (DLH) and machine hour (MH)

Answer 1