Question

Falling Down Co.'s relevant range of activity is 55,000 units to 65,000 units. When it produces and sells 60,000 units, its costs per unit are as follows: Per unit cost: Direct materials $1.80 Direct labor $5.90 Variable manufacturing overhead $1.20 Fixed manufacturing overhead $1.70 Variable selling and administrative costs $0.90 Fixed selling and administrative costs $1.30 If 62,000 units are produced, the total manufacturing cost is closest to:

Answer 1

Total manufacturing cost= $892,128

Step-by-step explanation:

Giving the following information:

When it produces and sells 60,000 units:

Direct materials $1.80

Direct labor $5.90

Variable manufacturing overhead $1.20

Fixed manufacturing overhead $1.70

The variable components remain constant at a unitary level. We need to calculate the total fixed components:

Fixed manufacturing overhead= 1.7*60,000= 102,000

Total manufacturing cost= total variable cost + total fixed costs

Total manufacturing cost= 62,000*(1.8 + 5.9 + 1.2) + 102,000

Total manufacturing cost= $892,128