Question

Karli produces organic cheese from milk supplied by an organic dairy. Karli pays an average of $8.00 for 10 gallons of the organic milk. The direct labor charge of her helper who converts the milk to cheese is $13.00 an hour. Her helper prepares a 5-pound wheel of cheese from 5 gallons of milk, working about 3 hours over several days. To the nearest cent, what is Karli's prime cost of manufacturing a wheel of cheese?

A.34.00
B.17.00
C.48.00
d.43.00

Answer 1

d. $43.00

Explanation:

Karli's total cost is ...

total cost = material cost + labor cost

= ($8.00/10 gal)·(5 gal) + ($13.00/h)·(3 h)

= $4.00 + $39.00

= $43.00