$
0.70
Fixed administrative expense
$
0.40
Sales commissions
$
1.50
Variable administrative expense
$
0.45
If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A) $30,150
B) $34,350
C) $42,150
D) $34,650
Answer: A
Explanation:
Direct materials
$
6.55
Direct labor
3.50
Direct manufacturing cost per unit (a)
$
10.05
Number of units produced (b)
3,000
Total direct manufacturing cost (a) × (b)
$
30,150
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
AICPA: BB Critical Thinking; FN Measurement
159) Dake Corporation's relevant range of activity is 2,000 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
$
6.55
Direct labor
$
3.50
Variable manufacturing overhead
$
1.40
Fixed manufacturing overhead
$
2.60
Fixed selling expense
$
0.70
Fixed administrative expense
$
0.40
Sales commissions
$
1.50
Variable administrative expense
$
0.45
If 3,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $4,200
B) $10,400
C) $14,600
D) $12,000
Answer: C
Explanation:
Total variable manufacturing overhead cost
($1.40 per unit × 3,000 units)
$
4,200
Total fixed manufacturing overhead cost
($2.60 per unit × 4,000 units*)
10,400
Total indirect manufacturing cost
$
14,600
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 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
AICPA: BB Critical Thinking; FN Measurement
160) Glew Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.00
Direct labor
$
3.35
Variable manufacturing overhead
$
1.75
Fixed manufacturing overhead
$
8,800
Sales commissions
$
1.00
Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
4,000
For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:
A) $57,200
B) $8,800
C) $44,400
D) $53,200
Answer: D
Explanation:
Direct materials
$
6.00
Direct labor
3.35
Variable manufacturing overhead
1.75
Variable manufacturing cost per unit
$
11.10
Total variable manufacturing cost
($11.10 per unit × 4,000 units produced)
$
44,400
Total fixed manufacturing overhead cost