Question

Ridez Manufacturing currently produces 4,000 bicycles per month. The following per unit data 2pply for sales to regular customers. Direct materials $53, Direct manufacturing labor 10, Variable manufacturing overhead 12, Fixed manufacturing overhead 14. What is the per unit cost of producing 5,000 bicycles? Select one:

a. $91.80 per unit
b. $86.20 per unit
c. $69.80 per unit
d. $111.25 per unit

Answer 1

The per unit cost of producing 5,000 bicycles by Ridez Manufacturing would be $86.20, which accounts for both variable and spread-out fixed costs.

Step-by-step explanation:

b. $86.20 per unit

The per unit cost of 5,000 bicycles for Ridez Manufacturing, considering direct materials, direct manufacturing labor, variable manufacturing overhead, and fixed manufacturing overhead, would be different from the cost of 4,000 bicycles because the fixed manufacturing overhead would be spread over more units. The variable costs (direct materials, direct manufacturing labor, and variable manufacturing overhead) remain constant on a per-unit basis regardless of the number of bicycles produced, totaling $75 ($53 + $10 + $12). The fixed manufacturing overhead per unit at 5,000 units would be calculated as follows: (4,000 bicycles × $14)/5,000 bicycles = $11.20 per unit. Therefore, the new per-unit cost of 5,000 bicycles would be $75 + $11.20 = $86.20 per unit.