Answer:
The material cost for December = $356,000
Step-by-step explanation:
The manufacturing overhead is the sum of the indirect costs that come from the manufacturing process except labor and materials
Hence, whereby the cost per liter = $0.47, we have;
Total volume produced = 4.0 million liters
Manufacturing overhead = $1,435,000
Total cost = Cost per liter × Total volume produced
∴ Total cost = 4 × 10⁶ × $0.47 = $1,880,000
Hence the cost of labor + materials = Total cost - Manufacturing overhead
the cost of labor + materials = $1,880,000 - $1,435,000 = $445,000
Labor cost = 25% material cost = 0.25 × material cost
∴ 0.25 × material cost + material cost = $445,000
1.25 × material cost = $445,000
material cost = $445,000/1.25 = $356,000
Which gives labor cost = 0.25 × $356,000 = $89,000
The material cost for December = $356,000.
