Question

Merone Company allocates materials handling cost to the company's two products using the below data: Modular Homes Prefab Barns Total expected units produced 5,100 8,100 Total expected material moves 510 110 Expected direct labor-hours per unit 710 210 The total materials handling cost for the year is expected to be $266,100. If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the prefab barns is closest to _________.

Answer 1

$85,050

Step-by-step explanation:

The material handling cost of Merone Company is allocated on the basis of direct labor hours.

Expected Total direct labor-hours (710 labor hour per unit * 5,100 units produced + 210 labor hour per unit * 8,100 units produced

= 3,621,000 + 1,701,000

Total Expected direct labor hours = 5,322,000

Material handling cost per labor hour: $266,100 / 5322000 labor hours

= $0.05 per labor hour

$0.05 per labor hour * 1,701,000 labor hours of Prefab Brans

= $85,050