Jojo drives a truck for a living but is attending Ashford to earn a degree in business administration because what he really wan
1 answer:
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Answer:
$175,000
Explanation:
Given:
Per unit cost of manufacturing = $4.50
Normal production rate = 50,000 units per year
Direct materials and direct labor costs = $2.50 per unit
Incremental overhead costs = $50,000 per year
Allocated fixed overhead costs = $50,000 per year
Quoted price = $3.70 per unit
Now,
total relevant cost per unit
= Direct materials and direct labor costs + (allocated fixed overhead costs ÷ Number of units to be made )
= $2.50 +
= $2.50 + $1
= $3.50
Therefore,
Total relevant cost of making 50000 units
= $3.5 × 50,000
= $175,000