Question

Rhonda Corporation's relevant range of activity is 3,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.40 Direct labor $ 3.55 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 4.05 Fixed selling expense $ 0.60 Fixed administrative expense $ 0.40 Sales commissions $ 1.00 Variable administrative expense $ 0.40 If 5,000 units are produced and sold, the fixed manufacturing overhead cost per unit is closest to:

Answer 1

Unitary fixed overhead= $3.24

Step-by-step explanation:

Giving the following information:

When it produces and sells 4,000 units, its average costs per unit are as follows:

Fixed manufacturing overhead $ 4.05

First, we need to calculate the total fixed overhead:

Total fixed overhead= 4.05*4,000= $16,200

Now, for 5,000 units:

Unitary fixed overhead= 16,200/5,000

Unitary fixed overhead= $3.24