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Carr Company produced a pilot run of fifty units of a recently developed piston used in one of its products. Carr expected to produce
Carr Company produced a pilot run of fifty units of a recently developed piston used in one of its products. Carr expected to produce and sell 1,950 units annually. The pilot run required an average of .55 direct labor hours per piston for 50 pistons. Carr experienced an eighty percent learning curve on the direct labor hours needed to produce new pistons. Past experience indicated that learning tends to cease by the time 800 pistons are produced. Carr's manufacturing costs for pistons are presented below. Direct labor Variable overhead Fixed overhead Materials $ 14.00 per direct labor hour 12.00 per direct labor hour 20.00 per direct labor hour 5.00 per unit Carr received a quote of $9 per unit from Truck Machine Company for the additional 1,900 needed pistons. Carr frequently subcontracts this type of work and has always been satisfied with the quality of the units produced by Truck. If the pistons are manufactured by Carr Company, the total direct labor hours for the first 800 pistons (including the pilot run) produced is calculated to be (round to two digits after the decimal point): Multiple Choice 180.22. 167.11. 173.69. 192.04.
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