Question

The following data pertains to activity and costs for two months:

June July
Activity level in units 10,000 12,000
Direct materials $ 16,000 $ ?
Fixed factory rent 12,000 ?
Manufacturing overhead 10,000 ?
Total cost $ 38,000 $ 42,900
Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was:
Multiple Choice:
A. $10,000
B. $11,700
C. $19,000
D. $9,300

Answer 1

The correct answer is D.

Step-by-step explanation:

Giving the following information:

The following data pertains to activity and costs for two months:

June July

Activity level in units 10,000 12,000

Direct materials $ 16,000 $ ?

Fixed factory rent 12,000 ?

Manufacturing overhead 10,000 ?

Total cost $ 38,000 $ 42,900

First, we need to calculate the unitary variable cost of direct material and direct labor.

Unitary cost Direct material= 16,000/10,000= 1.6 per unit

Unitary cost Direct Labor= 12,000/10,000= 1.2 per unit

Now, we calculate the cost of the prime costs of 12,000 units:

Direct material= 1.6*12,000= 19,200

Direct labor= 1.2*12,000= 14,400

Total= $33,600

Manufacturing overhead= 42,900 - 33,600= $9,300