Question

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 11,800 units 13,000 units Direct materials $ 761,100 $ 838,500 Direct labor $ 241,900 $ 266,500 Manufacturing overhead $ 1,010,800 $ 1,035,280 The best estimate of the total cost to manufacture 12,200 units is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice $2,102,580 $2,055,960 $2,032,650 $1,962,720

Answer 1

Answer:

Total cost= $2,008,608

Explanation:

Giving the following information:

Production 11,800 units 13,000 units

Direct materials: $761,100 -  $838,500

Direct labor: $241,900 -  $266,500

Manufacturing overhead: $1,010,800 - $1,035,280

First, we need to calculate the unitary cost for each level of production and choose the lower cost for each:

11,800 units:

Direct material= 761,100/11,800= $64.5

Direct labor= 241,900/11,800= $20.5

Variable overhead= 1,010,800/11,800= $85.66

Total unitary cost= 170.66

13,000 units:

Direct material= 838,500/13,000= 64.5

Direct labor= 266,500/13,000= $20.5

Variable overhead= 1,035,280 /13,000= $79.64

Total unitary cost= 164.64

Total cost for 12,200 units:

Total cost= 12,200*164.64= $2,008,608