Question

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: Production Volume Component 950 units 750 units Direct materials $17.00 per unit $17.00 per unit Direct labor $39.61 per unit $50.17 per unit Manufacturing overhead $18.08 per unit $20.10 per unit Round your answers to the nearest dollar. Fill in the blank without $ sign or comma or period, e.g., 12345 The approximate total cost to manufacture 850 units is:

Answer 1

68204

Step-by-step explanation:

The computation of total cost is shown below:-

The Total cost of 950 units

= 950 units × (17 + 39.61 + 18.08)

= 950 units × 74.69

= 70955.50

now,

The total cost of 750 units

= 750 units × (17 + 50.17 + 20.10)

= 750 units × 87.27

= 65452.5

So,

Variable cost per unit

= (Total cost at highest activity - Total cost at lowest activity) ÷ (Highest activity - Lowest activity)

= (70955.5 - 65452.50) + (950 units - 750 units)

= 5503 ÷ 200 units

= 27.515 per unit

And

Fixed cost

= Total cost at 750 Units - Variable cost at 750 units

= 65452.5 - (750 × 27.515)

= 65452.5 - 20636.25

= 44816.25

Hence,

Total manufacture cost of 850 units

Total Manufacturing cost = Variable cost + Fixed cost

=(850 × 27.515) + 44816.25

= 23387.75 + 44816.2

= 68204