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A small company produces sheaves for pumps. Each sheave is produced from bar stock, and machined: a) The bar stock is purchased in 4

 

A small company produces sheaves for pumps. Each sheave is produced from bar stock, and machined: a) The bar stock is purchased in 4 foot lengths. It has a diameter of 6 inches. Bar stock steel costs $3.00/lb, and has a density of 493 lb/ft. 1 length of stock can produce 20 sheaves. 5% of the steel is lost in the manufacturing process. 1 out of 10 sheaves needs to be scrapped because of poor quality. The scrap value of steel is $.40/lb. Calculate the material cost of a sheave (6 points) 1 b) Assume that a time study has been performed, and it is determined that it takes 1 man-hour to produce a sheave. Assume a 52 week year, 5 days a week, and 8 hours a day for production. If an employee is paid $75,000 per year, calculate the unit labor cost of an sheave. Assume direct labor tax rates of 17% (social security, Medicare, workman's comp, etc.), and also assume, for simplicity sake, that there are no benefits. (2 points) c) If Overhead is calculated as 20% of direct labor costs, calculate the fully allocated cost of the sheave. (2 points)

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Answer a The material cost of a sheave is 293 This is calculated by taking the cost of the bar stock 300lb multiplying it by the density of the steel 493 lbft and then multiplying it by 4 feet the len... blur-text-image

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