Marshall Co. produced a pilot run of forty-four units of

Marshall Co. produced a pilot run of forty-four units of a recently developed piston used in one of its products. Marshall expected to produce and sell 1,740 units annually. The pilot run required an average of 0.49 direct labor hours per piston for 44 pistons. Marshall experienced a seventy-five percent learning curve on the direct labor hours needed to produce new pistons. Past experience indicated that learning tends to cease by the time 710 pistons are produced. Marshall’s manufacturing costs for pistons are presented below. 

|Direct labor|$12.00per direct labor hour |

|Variable overhead|$10.00per direct labor hour |

|Fixed overhead|$17.00per direct labor hour |

|Materials|$4.00per unit 

Marshall received a quote of $7.00 per unit from Kytel Machine Co. for the additional 1,700 needed pistons. Marshall frequently subcontracts this type of work and has always been satisfied with the quality of the units produced by Kytel. If the pistons are manufactured by Marshall Co, the total direct labor hours for the first 704 pistons (including the pilot run) produced is calculated to be: 

A) 109.14750 

B) 48.51000 

C) 32.34000

 D) 163.72125 

E) 72.76500

 

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