Production workers for Chadwick Manufacturing Company provided 3,200 hours of la

Question

Production workers for Chadwick Manufacturing Company provided 3,200 hours of labor in January and 2,800 hours in February The company, whose operation is labor intensive, expects to use 48,000 hours of labor during the year. Chadwick paid a $120,000 annual premium on July 1 of the prior year for an insurance policy that covers the manufacturing facility for the following 12 months. Required Based on this information, how much of the insurance cost should be allocated to the products made in January and to those made in February? (Do not round intermediate colculations.) January February

Explanation / Answer

Amount of insurance premium paid per hour = $120,000/48000

= $2.5 per hour

Insurance cost

January =3200hrs*$2.5 per hour = $ 8000

February = 2800 hrs*$2.5= $7000

Hope its clear

Thanks

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