Answer:
a. Budgeted production cost for next month is $ 487,900
b Total production cost per unit for the previous month - $ 31.16 per unit
Total production cost per unit for the next month - $ 30.02 per unit
Explanation:
Computation for production cost for previous month
Variable manufacturing overhead $ 48,000
Direct Labor $ 187,500
Direct materials <u>$ 92,500</u>
Total variable costs $ 328,000
Fixed manufacturing overhead <u>$ 61,500</u>
Total manufacturing costs <u>$ 391,500</u>
No of units produced 12,500
Variable cost per unit ( $ 328,000 / 12,500) $ 26.24 per unit
Fixed cost per unit $ <u> 4,92 </u>per unit
Total production cost per unit for previous month $ 31.16 per unit
Computation of total production cost for next month
Variable production costs per unit $ 26.24 per unit
Budgeted production 16,250 units
Total variable production costs for next month
$ 26.24 per unit * 16,250 units $ 426,400
Add: Fixed production costs $ 61,500
Total production costs for next month $ 487,900
Computation or per unit cost for next month
Total production cost/ No of units budgeted
$ 487,900/ 16,250 = $ 30.02 per unit
