Question

The relevant range of production for Hallergan Corporation is 11,000 to 14,000 units. When Hallergan Corporation produces and sells 12,500 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.20 Direct labor $ 4.20 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 5.20 Fixed selling expense $ 3.70 Fixed administrative expense $ 2.70 Sales commissions $ 1.20 Variable administrative expense $ 0.70 Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 12,500 units

Answer 1

Answer:

Total unitary product cost= $18.3

Explanation:

Giving the following information:

Direct materials $ 7.20

Direct labor $ 4.20

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 5.20

The product cost is calculated using the direct material, direct labor, and manufacturing overhead:

Total overhead per unit= 1.7 + 5.2= $6.9

Direct material= $7.2

Direct labor= $4.2

Total unitary product cost= $18.3