Cost of manufacturing in-house.

Number of units produced annually - 50,000

Costs incurred monthly:

Materials - $75,000

Labor - $100,000

Total monthly - $175,000

Total annually - $2,100,000

Explanation:

Variable factory overhead

$7.50 per unit

Total variable overhead cost = $7.5 * 50,000 = $375,000

Fixed factory overhead - 150% per unit labor

Total Fixed factory overhead = 1.5 * 1,200,000 = $1,800,000

Total production cost = Total Material & labor costs + Total variable overhead cost + Total Fixed factory overhead

Total production cost =$2,100,000 + $375,000 + $1,800,000

Total production cost = $4,275,000

Cost of producing one unit = $85.5

*In this equation, where does the 1,200,000 come from in the Total Fixed Factory overhead? I understand everything else, but I don't know how you got the figure 1,200,000 to multiply that by 150% to get $1,800,000. Where does 1,200,000 come from?