Question

Dake Corporation's relevant range of activity is 4,500 units to 8,500 units. When it produces and sells 6,500 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.40 Direct labor $ 3.50 Variable manufacturing overhead $ 2.00 Fixed manufacturing overhead $ 2.20 Fixed selling expense $ 0.90 Fixed administrative expense $ 0.60 Sales commissions $ 0.70 Variable administrative expense $ 0.60 For financial reporting purposes, the total amount of product costs incurred to make 6,500 units is closest to:

Answer 1

Product costs= $77,350

Step-by-step explanation:

The product costs are those incurred directly into production. In this case, it is for financial purposes, therefore we take into account the variable costs. If it were for accounting purposes, it can incorporate the fixed overhead.

Product costs= direct material + direct labor + variable overhead

Product costs= 6,500*(6.4 + 3.5 + 2)

Product costs= $77,350