Question

Perteet Corporation's relevant range of activity is 3,600 units to 8,000 units. When it produces and sells 5,800 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.30 Direct labor $ 3.20 Variable manufacturing overhead $ 1.40 Fixed manufacturing overhead $ 3.30 Fixed selling expense $ 0.50 Fixed administrative expense $ 0.20 Sales commissions $ 0.30 Variable administrative expense $ 0.35 If 4,400 units are produced, the total amount of manufacturing overhead cost is closest to:

Answer 1

Answer:

Total MFG Overhead  $ 20680

Explanation:

Perteet Corporation

Manufacturing overhead consists of Variable manufacturing overhead and Fixed manufacturing overhead.

Variable manufacturing overhead $ 1.40

Fixed manufacturing overhead $ 3.30

Manufacturing overhead per unit    $ 4.7

No of units =  4,400

Total MFG Overhead = 4.7 * 4400 =  $ 20,680

The manufacturing overhead costs do no not consists of Fixed selling expense, Fixed administrative expense ,Sales commissions and Variable administrative expense. Another way of finding the manufacturing overhead costs is subtracting the cost of direct materials and direct labor from the cost of goods sold.

Cost of Goods Sold $ 14.2

Direct materials $ 6.30

Direct labor $ 3.20

Variable manufacturing overhead $ 1.40

Fixed manufacturing overhead $ 3.30

Total Manufacturing Costs= $ 14.2

Less Direct Materials Cost= $ 6.3

Less Direct Labor Costs = $ 3.2

Mfg Overhead= $ 4.7

No Of Units = 4400

Total MFG Overhead = 4.7 * 4400= $ 20680