Question

Wade Company expects to produce 5,500 units of product IOA during the current year. Budgeted variable manufacturing costs per unit are direct materials at $7, direct labour at $13, and overhead at $18. Monthly budgeted fixed manufacturing overhead costs are $8,000 for depreciation and $3,800 for supervision.

In the current month, Wade produced 6,000 units and incurred the following costs: direct materials $38,850, direct labour $76,440, variable overhead $116,640, depreciation $8,000, and supervision $4,000.

Answer 1

To calculate total revenue and total cost, multiply the price of the aquarium by the number of units sold and add the fixed costs to the variable costs, respectively. To calculate marginal revenue and marginal cost, subtract the previous level's total revenue or total cost from the current level's total revenue or total cost, respectively.

Step-by-step explanation:

To calculate total revenue for each output level, multiply the price of the aquarium by the number of units sold. For example, for one unit, the total revenue is $20. For two units, it would be $20 x 2 = $40. To calculate marginal revenue, subtract the previous level's total revenue from the current level's total revenue. For example, for two units, the marginal revenue is $40 - $20 = $20.

To calculate the total cost for each output level, add the fixed costs to the variable costs. For example, for one unit, the total cost is $20 (fixed costs) + $20 (variable costs) = $40. To calculate marginal cost, subtract the previous level's total cost from the current level's total cost. For example, for two units, the marginal cost would be $45 - $40 = $5.