$
7.90
Number of units produced (b)
4,000
Total direct manufacturing cost (a) × (b)
$
31,600
Difficulty: 1 Easy
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.; 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
117) Norred Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
7.05
Direct labor
$
3.70
Variable manufacturing overhead
$
1.60
Fixed manufacturing overhead
$
121,500
Sales commissions
$
1.50
Variable administrative expense
$
0.45
Fixed selling and administrative expense
$
44,550
If 8,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $120,800.
B) $134,300.
C) $12,800.
D) $121,500.
Answer: B
Explanation:
Total variable manufacturing overhead cost ($1.60 per unit × 8,000 units)
$
12,800
Total fixed manufacturing overhead cost
121,500
Total indirect manufacturing cost
$
134,300
Difficulty: 1 Easy
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.; 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
118) 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:
A) $15,000
B) $22,800
C) $7,800
D) $25,800
Answer: B
Explanation:
Total variable manufacturing overhead cost ($1.30 per unit × 6,000 units)
$
7,800
Total fixed manufacturing overhead cost ($3.00 per unit × 5,000 units*)
15,000
Total indirect manufacturing cost
$
22,800
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 5,000 units.
Difficulty: 2 Medium
Topic: Cost Classifications for Assigning Costs to Cost Objects; Cost Classifications for Manufacturing Companies; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.; 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking