Question

Schonhardt Corporation's relevant range of activity is 4,000 units to 7,500 units. When it produces and sells 5,750 units, its average costs per unit are as follows:

AverageCost per UnitDirect materials$7.80 Direct labor$3.30 Variable manufacturing overhead$1.85 Fixed manufacturing overhead$3.60 Fixed selling expense$1.15 Fixed administrative expense$0.85 Sales commissions$0.95 Variable administrative expense$0.85

If 6,500 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

Answer 1

The total amount of fixed manufacturing cost incurred for producing 6,500 units is approximately $30,875.

Step-by-step explanation:

The fixed manufacturing cost is given by the formula: Total Fixed Manufacturing Cost = (Fixed Manufacturing Overhead + Fixed Selling Expense + Fixed Administrative Expense) * Units Produced

From the given data, we know that the fixed manufacturing overhead is $3.60 per unit, the fixed selling expense is $1.15 per unit, and the fixed administrative expense is $0.85 per unit.

So, the total fixed manufacturing cost for producing 6,500 units is approximately $30,875.