Pluton makes particular plastics for sale to the public and the government.Basic cost data for a 100-pound drum of one particular product called Xentra appears below: $\begin{array}{c}\begin{array}{lll}\\ \text {Chemical Xeta, gals}\\ \text {Chemical Thenta, gals }\\ \text {Base material, pound }\\ \text {100-1b lined drum} \end{array}\begin{array}{lll} \text {Qty}\\15\\35\\20\\1 \end{array}\begin{array}{rr} & \text { Cost } \\\$ & 25.00 \\\$ & 27.50 \\\$ & 1.00 \\\$&51.83\end{array}\end{array}$
Variable factory overhead is 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 overhead.The highly automated plant typically runs 21,000 machine hours per month.The preparation of one 100-pound batch of Xentra needs ten minutes of direct labor and 75 minutes of machine time.Fixed manufacturing overhead totals $3,500,000 per month.Forty percent of the fixed manufacturing overhead is labor-related costs and the balance is machine-related costs.
Assuming normal production levels,what is the direct materials and direct labor cost per drum?

Question

Pluton makes particular plastics for sale to the public and the government.Basic cost data for a 100-pound drum of one particular product called Xentra appears below:

\begin{array}{c}\begin{array}{lll}\\ \text {Chemical Xeta, gals}\\ \text {Chemical Thenta, gals }\\ \text {Base material, pound }\\ \text {100-1b lined drum} \end{array}\begin{array}{lll} \text {Qty}\\15\\35\\20\\1 \end{array}\begin{array}{rr} & \text { Cost } \\\$ & 25.00 \\\$ & 27.50 \\\$ & 1.00 \\\$&51.83\end{array}\end{array}

Variable factory overhead is 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 overhead.The highly automated plant typically runs 21,000 machine hours per month.The preparation of one 100-pound batch of Xentra needs ten minutes of direct labor and 75 minutes of machine time.Fixed manufacturing overhead totals $3,500,000 per month.Forty percent of the fixed manufacturing overhead is labor-related costs and the balance is machine-related costs.
Assuming normal production levels,what is the direct materials and direct labor cost per drum?

Quizplus · Accepted Answer

Direct materials cost per drum of Xentra:
Chemical Xeta: 15 gals per drum, at $25 per gal = $375
Chemical Thenta: 35 gals per drum, at $27.50 per gal = $962.50
Base material: 20 pounds per drum, at $1 per pound = $20
Drum: 1 per drum, at $51.83 per drum = $51.83
Total direct materials cost per drum = $1,409.33

Direct labor cost per drum of Xentra:
Direct labor time per drum = 10 minutes
Total direct labor time for 1,000,000 pounds of product = 1,000,000 pounds × (1 drum/100 pounds) × (10 minutes/60 minutes) = 16,667 hours
Number of chemical workers = 20
Total direct labor cost for chemical workers = 20 workers × 175 hours × $24/hour = $84,000
Direct labor cost per drum = $84,000/16,667 drums = $5.04
Total direct cost per drum = $1,409.33 + $5.04 = $1,414.37, which rounds to $1,413.33.

Pluton Makes Particular Plastics for Sale to the Public