Solved

Pluton Makes Particular Plastics for Sale to the Public and the Government

question 7

Multiple Choice

Pluton makes particular plastics for sale to the public and the government. Basic cost data for a 100-pound drum of one particular product called Xentra appears below: $\begin{array} { | l | r | r | } \hline & \text { Qty } & \text { Cost } \\\hline \text { Chemical Xeta, gals } & 15 & \$ 25.00 \\\hline \text { Chemical Thenta, gals } & 35 & \$ 27.50 \\\hline \text { Base material, lbs } & 20 & \$ 1.00 \\\hline 100 \text {-Ib lined drum } & 1 & \$ 51.83 \\\hline\end{array}$ Variable factory overheads are estimated to be $1,200,000 per month, when 1,000,000 pounds of various products are produced. The plant employs 20 chemical workers who typically work 175 hours each per month and are paid $24 per hour. Other workers are classified as indirect and are included in fixed overheads. The highly automated plant typically runs 21,000 machine hours per month. The preparation of one 100 lbs batch of Xentra needs ten minutes of direct labor and 75 minutes of machine time. Fixed manufacturing overheads total $3,500,000 per month. Forty percent of these fixed manufacturing overheads are labor-related costs and the balance are machine-related costs. A government agency wants to purchase 200 drums of Xentra at cost plus a flat fee. Which allocation method gives the profit-maximizing result?

Definitions:

Abraham Maslow

An American psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling inherent human needs.

Older Adulthood

A life stage characterized by ages 65 and above, often associated with retirement, changing physical and cognitive abilities, and adjustments in social roles.

Erik Erikson

Noted for introducing the concept of eight stages of human development spanning from infancy to adulthood.