Question

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production

Answer 1

This question is incomplete, the complete question is;

Martinez company's relevant range production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:-

                                                                 Average cost per unit

Direct materials                                                 $7.00

Direct labor                                                        $4.50

Variable manufacturing overhead                   $1.40

Fixed manufacturing overhead                        $4.00

Fixed selling expense                                       $4.00

Fixed administrative expense                          $2.10

Sales commissions                                            $1.10

Variable administrative expense                      $0.55

If 8,000 units are produced,

a) what is the total amount of manufacturing overhead cost incurred to support this level of production

b) What is this total amount expressed on a per unit basis

Answer:

a) the total amount of manufacturing overhead cost incurred to support this level of production is $51,200

b) What is this total amount expressed on a per unit basis is $6.40

Explanation:

a)

Given that;

number of units produced is 8,000 units

Variable manufacturing overhead is $1.40

Variable manufacturing overhead cost will be units produced / Variable manufacturing overhead

so Variable manufacturing overhead cost = 8000 units × $1.40 =  $11,200

Now  Fixed manufacturing overhead cost = 10000 units × $4 = $ 40,000

Total manufacturing overhead cost is the addition of Variable manufacturing overhead cost and Fixed manufacturing overhead cost

$11,200 + $40,000 = $51,200

b)

Number of units produced = 8,000

therefore Manufacturing overhead per unit = Total manufacturing overhead cost / Number of units produced

51,200 / 8,000 = $6.40