abor-bour head cost of S3.402.000)andthe estimated 0,000 total direct labor- for 20x9 4. S3,402,000 overhead rate 63,000hors Predetermined $54 per direct labor-hour new predetermined overhead rate was communicated to top managers in cember 19. The rate did not cause any comment because it was within a few penntes head rate that had been used during 2008. One of the subj proposal by the o over p production manager to purchase an automatelig machine built by Industries. The president of Kelvin Aerospace. Harry Arcany agreed to meet with the sales repes sentative from Sunghi Industries to discuss the proposal, aha On the day following the meeting, Mr. Arcany met with Jasmine Chang, Sunghi Industrin sales representative. The following discassion took place: Arcany: Wally, our production manager, aske installing an automated milling machine. F me this isn't just another expensive toy for Wally's people to play with. Chang: This is a great machine with direct bottom-line benefits. The automated milling ma chine has three major advantages. First, it is much faster than the mama methods using. It can process about twice as many parts per hour as yousprsscnt iling machines Second, it is much more flexible those have been incurred, almost no serup is required to run a standard operation. You just punch in the code fop and the machine does the res Arcany: What about cost? Havigg twice the capacity in the milling machine area won't much good. That center is idle much of the time anyway. Chang: I was getting there. Wally and I looked Over your present operations, and we estimated that the automated equip ment would climinate the need for about 6,000 direct labor-hours a year. What is your labor cost per hour? Arcany: The wage rate in the milling area averages about $32 per hour. Fringe benefits raise that figure to about $41 per hour Chang: Don't forget your overhead. Arcany: Next year the overhead rate will be S54 per hour Chang: So including fringe benefits and overhead, the cost per direct labor-hour is about Arcany: That's right. Chang: Since you can save 6,000 direct labor to about $570,000 a year. And our 60 o meeh with you because he is interestedn al. You're going to have to show are some up-front programming costs, but once ndard operation, load the machine's hopper with raw material, The third advantage of the automated milling machine is lower cost e-hours per year, the cost savings would amount abor-bour head cost of S3.402.000)andthe estimated 0,000 total direct labor- for 20x9 4. S3,402,000 overhead rate 63,000hors Predetermined $54 per direct labor-hour new predetermined overhead rate was communicated to top managers in cember 19. The rate did not cause any comment because it was within a few penntes head rate that had been used during 2008. One of the subj proposal by the o over p production manager to purchase an automatelig machine built by Industries. The president of Kelvin Aerospace. Harry Arcany agreed to meet with the sales repes sentative from Sunghi Industries to discuss the proposal, aha On the day following the meeting, Mr. Arcany met with Jasmine Chang, Sunghi Industrin sales representative. The following discassion took place: Arcany: Wally, our production manager, aske installing an automated milling machine. F me this isn't just another expensive toy for Wally's people to play with. Chang: This is a great machine with direct bottom-line benefits. The automated milling ma chine has three major advantages. First, it is much faster than the mama methods using. It can process about twice as many parts per hour as yousprsscnt iling machines Second, it is much more flexible those have been incurred, almost no serup is required to run a standard operation. You just punch in the code fop and the machine does the res Arcany: What about cost? Havigg twice the capacity in the milling machine area won't much good. That center is idle much of the time anyway. Chang: I was getting there. Wally and I looked Over your present operations, and we estimated that the automated equip ment would climinate the need for about 6,000 direct labor-hours a year. What is your labor cost per hour? Arcany: The wage rate in the milling area averages about $32 per hour. Fringe benefits raise that figure to about $41 per hour Chang: Don't forget your overhead. Arcany: Next year the overhead rate will be S54 per hour Chang: So including fringe benefits and overhead, the cost per direct labor-hour is about Arcany: That's right. Chang: Since you can save 6,000 direct labor to about $570,000 a year. And our 60 o meeh with you because he is interestedn al. You're going to have to show are some up-front programming costs, but once ndard operation, load the machine's hopper with raw material, The third advantage of the automated milling machine is lower cost e-hours per year, the cost savings would amount