Question

eBookPrintReferences Check my work Check My Work button is now enabledItem 180Item 180 Ouelette Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $5.25 Direct labor $4.05 Variable manufacturing overhead $1.30 Fixed manufacturing overhead $3.00 Fixed selling expense $0.70 Fixed administrative expense $0.40 Sales commissions $0.50 Variable administrative expense $0.45 If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Answer 1

$22,800

Step-by-step explanation:

Calculation for the total amount of indirect manufacturing cost incurred

First step is to find the fixed manufacturing overhead portion

Fixed manufacturing overhead portion=$3.00 *5000 units

Fixed manufacturing overhead portion =$15,000

Second step is to calculate the indirect manufacturing cost if 6,000 units are produced using this formula

Indirect manufacturing cost =Fixed manufacturing overhead portion

+ Variable portion

Let plug in the formula

Indirect manufacturing cost=$15,000 + ($1.30*6,000 units)

Indirect manufacturing cost=$15,000+$7,800

Indirect manufacturing cost=$22,800

Therefore the total amount of indirect manufacturing cost incurred is closest to $22,800