Question

Dake corporation's relevant range of activity is 3,500 units to 8,500 units. When it produces and sells 6,000 units, its average costs per unit are as follows: average cost per unit direct materials $ 6.60 direct labor $ 3.60 variable manufacturing overhead $ 1.35 fixed manufacturing overhead $ 3.30 fixed selling expense $ 0.95 fixed administrative expense $ 0.65 sales commissions $ 0.75 variable administrative expense $ 0.65 for financial reporting purposes, the total amount of product costs incurred to make 6,000 units is closest to:

Answer 1

In order to find total production cost of producing 6000 units we need to find Average Total cost per unit, which can be found out as below:

Direct material                                               $6.6

Direct Labour                                                  $3.6

Variable Manufacturing Cost                          $1.35

Fixed Manufacturing Cost                                $3.3

Fixed Selling Price                                             $0.95

Fixed Administrative Expense                           $0.65

Sales Commissions                                            $0.75

Variable Administrative Expense                      $0.65

Total Expense Per Product                               $17.85

Total No of Products Produced                         6000 Units

Total Cost of Production for 6000 Units          $107100