Question

Pedregon Corporation has provided the following information:

	Cost per Unit			Cost per Period
Direct materials	$	7.35
Direct labor	$	4.30
Variable manufacturing overhead	$	1.60
Fixed manufacturing overhead				$	26,000
Sales commissions	$	0.80
Variable administrative expense	$	0.90
Fixed selling and administrative expense				$	6,000

If 6,500 units are produced, the total amount of manufacturing overhead cost is closest to:

Answer 1

Ans:

Particulars	Amount
Variable manufacturing overhead ($1.6*6,500units)	$  10,400
Fixed manufacturing overhead	$ 26,000
Total manufacturing Overhead cost	$ 36,400

Note:

1) Manufacturing cost includes Direct material + Direct labor + Manufacturing overhead

2) But Manufacturing overhead cost includes variable MOH + Fixed MOH

3) Fixed manufacturing costs will not change based on number of units produced. it will be constant.