Question

Perteet Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $6.70
Direct labor $3.25
Variable manufacturing overhead $1.60
Fixed manufacturing overhead $3.00
Fixed selling expense $0.70
Fixed administrative expense $0.40
Sales commissions $0.50
Variable administrative expense $0.55
If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:__________
a. $28,000
b. $14,800
c. $21,400
d. $18,100

Answer 1

Answer:

Total overhead cost= $21,400

Explanation:

Giving the following information:

When it produces and sells 5,000 units, its average costs per unit are as follows:

Variable manufacturing overhead $1.60

Fixed manufacturing overhead $3.00

First, we need to calculate the total fixed manufacturing overhead:

Fixed overhead= 3*5,000= $15,000

Now, we can calculate the total overhead cost for 4,000 units.

Total overhead cost= total variable cost + total fixed cost

Total overhead cost= 1.6*4,000 + 15,000

Total overhead cost= $21,400