Question

The following costs related to Summertime Company for a relevant range of up to 20,000 units annually: Variable Costs: Direct materials $2.50 Direct labor 0.75 Manufacturing Overhead 1.25 Selling and administrative 1.50 Fixed Costs: Manufacturing overhead $10,000 Selling and Administrative 5,000 The selling price per unit of product is $15.00. At a sales volume of 15,000 units, what is the total cost for Summertime Company

Answer 1

Total cost= $105,000

Step-by-step explanation:

Because the 15,000 units are in the relevant range, the fixed costs remain constant. Now, we need to calculate the total cost of 15,000 units:

Direct material= 15,000*2.5= 37,500

Direct labor= 15,000*0.75= 11,250

Variable overhead= 15,000*1.25= 18,750

Variable selling and administrative= 15,000*1.5= 22,500

Total variable cost= $90,000

Total fixed costs= $15,000

Total cost= $105,000