Fixed manufacturing overhead
$
9.90
Fixed selling expense
$
2.25
Fixed administrative expense
$
1.80
Sales commissions
$
1.00
Variable administrative expense
$
0.50
If 8,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $14,000
B) $93,200
C) $89,100
D) $103,100
Answer: D
Explanation:
Total variable manufacturing overhead cost
($1.75 per unit × 8,000 units)
$
14,000
Total fixed manufacturing overhead cost
($9.90 per unit × 9,000 units*)
89,100
Total indirect manufacturing cost
$
103,100
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 9,000 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
177) Kesterson Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.20
Direct labor
$
3.10
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
14,000
Sales commissions
$
1.50
Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
4,500
If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:
A) $16,300
B) $25,600
C) $19,400
D) $13,200
Answer: C
Explanation:
Total variable manufacturing overhead cost
($1.35 per unit × 4,000 units)
$
5,400
Total fixed manufacturing overhead cost
14,000
Total manufacturing overhead cost (a)
$
19,400
Difficulty: 1 Easy
Topic: Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements
Learning Objective: 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
178) Kesterson Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.20
Direct labor
$
3.10
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
14,000
Sales commissions
$
1.50
Variable administrative expense
$
0.40
Fixed selling and administrative expense
$
4,500
If the selling price is $21.90 per unit, the contribution margin per unit sold is closest to:
A) $9.35
B) $12.60
C) $8.45
D) $5.65
Answer: A
Explanation:
Selling price per unit
$21.90
Direct materials
$6.20
Direct labor
3.10
Variable manufacturing overhead
1.35
Sales commissions
1.50
Variable administrative expense
0.40
Variable cost per unit sold
12.55
Contribution margin per unit
$9.35