Question

Skolnick Corporation has provided the following information: Cost per Period Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales commissions Variable administrative expense Fixed selling and administrative expense Cost per Unit $5.90 $ 4.10 $ 2.20 $152,000 $ 1.40 $ 0.30 $ 43,700 Required: a. If 9,500 units are produced, what is the total amount of direct manufacturing cost incurred? (Do not round intermediate calculations.) b. If 9,500 units are produced, what is the total amount of indirect manufacturing costs incurred? a. Total direct manufacturing cost b. Total indirect manufacturing cost

Answer 1

Answer:

a.	Total direct manufacturing cost	$95,000
b.	Total indirect manufacturing cost	$172,900

Working note:

a. Direct manufacturing cost is the sum of direct material and direct labor.

Direct material per unit = $5.9

Direct labor per unit = $4.1

So, total direct manufacturing cost per unit = $5.9 + $4.1 = $10

Total direct manufacturing cost if 9,500 units are produced = 9,500 * $10 = $95,000

b. Indirect manufacturing cost is the sum of variable manufacturing overhead and fixed manufacturing overhead.

Fixed manufacturing overhead = $152,000 (this is constant, doesn't change with the number of units within relevant range)

Variable manufacturing overhead per unit = $2.2

So, for 9,500 units, variable manufacturing overhead = 9,500 * $2.2 = $20,900

So, total indirect manufacturing cost = $20,900 + $152,000 = $172,900

*Sales commission, administrative expense,selling and administration expenses are not manufacturing costs.