Schonhardt Corporation's relevant range of activity is 3,000 units to 5,000 units. When it produces and...
Schonhardt Corporation's relevant range of activity is 3,000 units to 5,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:
| Average Cost per Unit |
||||||
| Direct materials | $ | 7.95 | ||||
| Direct labor | $ | 3.60 | ||||
| Variable manufacturing overhead | $ | 2.00 | ||||
| Fixed manufacturing overhead | $ | 2.60 | ||||
| Fixed selling expense | $ | 1.30 | ||||
| Fixed administrative expense | $ | 1.00 | ||||
| Sales commissions | $ | 1.10 | ||||
| Variable administrative expense | $ | 1.00 | ||||
If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:
a. $15,600
b. $22,400
c. $10,400
d. $18,500
Homework Answers
Answer: Option (C) $10,400
Explanation:
Fixed Manufacturing Overhead Per unit = $2.60
Number of units Produced = 4000
Total Fixed Manufacturing cost = $2.60 * 4000 = $10,400
It is given that the Relevant range is between 3000 - 5000 units . As the production (5000 units) is with in relevant range the fixed cost remains constant. So Total fixed Manufacturing cost is $10,400.
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