Question

Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: (18 points)

	Average Cost Per Unit
Direct materials	$	5.70
Direct labor	$	3.20
Variable manufacturing overhead	$	1.60
Fixed manufacturing overhead	$	4.00
Fixed selling expense	$	2.70
Fixed administrative expense	$	2.10
Sales commissions	$	1.10
Variable administrative expense	$	0.55

If 12,000 units are produced what is the total product cost?

Answer 1

Solution:- Computation of Total Product cost Particulars Amount($) Direct Material Cost per unit $5.70 Direct Labor cost per unit $3.20 Variable Manufacturing overhead cost per unit $1.60 Fixed Manufacturing overhead cost per unit $4.00 Total product cost per Unit $14.50 Total Product Cost = 12,000 units × $14.50 = $174,000