Question

If 14,700 units are produced, the total amount of manufacturing overhead cost is closest to:

Fixed manufacturing overhead per unit (a) = $ 3.10
Number of units budgeted (b) = 12,200
Total fixed manufacturing cost (a) × (b) = $ 37,820
Variable overhead per unit (a) = $ 1.60
Number of units produced (b) = 14,700
Total variable overhead cost (a) × (b) = $ 23,520

Answer 1

Total manufacturing overhead cost will be closest to 61,340

Step-by-step explanation:

As we can see there is not step-up fixed cost that is no additional fixed cost will incurred upon producing extra units, therefore fixed cost will remain same that is 37,820.

Variable overhead cost will increase with increase in units therefore, variable cost for producing 14,700 units will be 1.6 x 14,700 = 23,520.

To find total overhead cost we will simply add fixed and variable overhead cost:

Total overhead cost = fixed overhead cost + variable overhead cost

Total overhead cost = 37,820 + 23,520

Total overhead cost = 61,340