Question

Ouelette 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 $5.25, Direct labor $4.05, Variable manufacturing overhead $1.30, Fixed manufacturing overhead $3.00, Fixed selling expense $ 0.70, Fixed administrative expense $0.40, Sales commissions $0.50, Variable administrative expense $0.45. If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:_.
A) $79,200.B) $63,600.C) $62.700.D) $76,600.

Answer 1

Answer:

$22,800

Explanation:

Ouelette Corporation's

FIxed manufacturing overhead :

$3.00 *5000 units =$15,000.

Hence $15,000 will be the same until 7000 units range of production.

Variable manufacturing overhead will be $1.30 per unit till 7000 units range of production.

so the indirect manufacturing cost when 6000 units:

fixed portion + variable portion

=$15,000 + ($1.30*6000 units)

=$22,800.