Question

Dake Corporation's relevant range of activity is 2,900 units to 7,500 units. When it produces and sells 5,200 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$ 6.50
Direct labor	$ 3.40
Variable manufacturing overhead	$ 1.25
Fixed manufacturing overhead	$ 3.50
Fixed selling expense	$ 0.85
Fixed administrative expense	$ 0.55
Sales commissions	$ 0.65
Variable administrative expense	$ 0.55

For financial reporting purposes, the total amount of product costs incurred to make 5,200 units is closest to:

Answer 1

Direct materials = $6.50 per unit

Direct labor = $3.40 per unit

Variable manufacturing overhead = $1.25 per unit

Fixed manufacturing overhead = $3.50 per unit

Calculation of Total Product Costs To Make 5,200 units
Direct materials (5,200 x 6.50)	33,800
Direct labor (5,200 x 3.40)	17,680
Variable manufacturing overhead (5,200 x 1.25)	6,500
Fixed manufacturing overhead (5,200 x 3.50)	18,200
Total product cost	$76,180

The total amount of product costs incurred to make 5,200 units is closest to $76,180.

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