Question

Perteet corporation's relevant range of activity is 7,500 units to 14,500 units. when it produces and sells 11,000 units, its average costs per unit are as follows: average cost per unit direct materials $ 7.60 direct labor $ 3.85 variable manufacturing overhead $ 1.50 fixed manufacturing overhead $ 3.00 fixed selling expense $ 0.85 fixed administrative expense $ 0.55 sales commissions $ 0.65 variable administrative expense $ 0.70 if 7,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Answer 1

If Perteet corporation produces 7,000 units, the variable manufacturing overhead cost shall be 7,000 units * $1.50 = $10,500

And fixed manufacturing overhead shall remain same in totality, hence fixed manufacturing overhead cost shall be 11,000 units *$3 = $33,000

The total amount of manufacturing overhead cost = 10,500+33,000 = $43,500

Hence, the total amount of manufacturing overhead cost at the level of 7,000 units production shall be  $43,500