Question

Bike Atlanta currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers: Direct materials $30 Direct manufacturing labor 5 Variable manufacturing overhead 10 Fixed manufacturing overhead 40 Total manufacturing costs $85 The plant has capacity for 3,000 axles and is considering expanding production to 3,000 axles. What is the total cost of producing 3,000 axles?

Answer 1

Answer:

The total cost of producing 3,000 axles is $255,000

Explanation:

The computation of the total cost is shown below:

= Total per unit manufacturing costs × total number of axles produced

= $85 × 3,000 axles

= $255,000

The total manufacturing includes all costs such as Direct materials, direct manufacturing labor, Variable manufacturing overhead and, Fixed manufacturing overhead.