Question

Dake Corporation's relevant range of activity is 5,200 units to 6,000 units. When it produces and sells 5,600 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.55 Direct labor $ 3.80 Variable manufacturing overhead $ 2.15 Fixed manufacturing overhead $ 3.50 Fixed selling expense $ 1.05 Fixed administrative expense $ 0.75 Sales commissions $ 0.85 Variable administrative expense $ 0.75 If 5,400 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Answer 1

Total direct manufacturing cost= $55,890

Step-by-step explanation:

Giving the following information:

5,600 units:

Average Cost per Unit Direct materials $ 6.55

Direct labor $ 3.80

The manufacturing overhead is an indirect cost. It is allocated based on a predetermined rate. We will take into account only the direct materials and direct labor.

For 5,400 units:

Total direct manufacturing cost= 5,400*(6.55 + 3.8)

Total direct manufacturing cost= $55,890