Question

Schonhardt Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:

Average Cost per Unit Direct materials $7.75
Direct labor $3.20
Variable manufacturing overhead $1.80
Fixed manufacturing overhead $3.30
Fixed selling expense $1.10
Fixed administrative expense $0.80
Sales commissions $0.90
Variable administrative expense $0.80

If 6,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

a. $16,500
b. $16,500
c. $22,000
d. $24,000

Answer 1

a. $16,500

Step-by-step explanation:

The computation of the total amount of fixed manufacturing cost is shown below;

= Number of units sold & produced × fixed manufacturing overhead per unit

= 5,000 units × $3.30

= $16,500

Hence, the correct option is a.