Question

Shelley Corporation's relevant range of activity is 4,500 units to 9,500 units. When it produces and sells 7,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.60 Direct labor $ 3.35 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 3.80 Fixed selling expense $ 0.80 Fixed administrative expense $ 0.50 Sales commissions $ 0.60 Variable administrative expense $ 0.65 If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Answer 1

35100

Step-by-step explanation:

3.80 x 7000 = 26600 (to calculate the total fixed overhead incurred)

1.70 x 5000 = 8500
( because it is a variable overhead cost per unit and it increases with every additional unit produced)

Now at 5000 units:

8500 + 26600 = 35100

Answer 2

$35,100

Step-by-step explanation:

Shelley Corporation's

Total variable manufacturing overhead cost ($1.70 per unit × 5,000 units) $ 8,500

Total fixed manufacturing overhead cost ($3.80 per unit × 7,000 units*) 26,600

Total manufacturing overhead cost $35,100

Therefore the total amount of manufacturing overhead cost is closest to: $35,100