Question

At a volume of 11,000 units, Pwerson Company incurred $33,000 in factory overhead costs, including $11,000 in fixed costs. If volume increases to 13,000 units and both 11,000 units and 13,000 units are within the relevant range, then the company would expect to incur total factory overhead costs of:

Answer 1

Answer:

$37,000.00

Explanation:

Total fixed overhead costs = $11,000.00

Variable overhead cost at 11,000 units of production

=Total overheads - Fixed overheads

=$33,000 -$11,000 = $22,000

Variable cost per unit = $\frac{22000}{11000}$ = $2 per unit

When production increased to 13,000 units then overheads costs will be

Fixed Costs = $11,000 Remains constant up to certain activity level, here 13,000 units is acceptable level

Variable costs = 13,000 units X $2 per unit = $26,000

Total Overhead costs = Fixed + Variable

= $11,000 + $26,000 = $37,000

Total = $37,000