Asked by Daniel Juarez on Jul 22, 2024
Verified
The best estimate of the total monthly fixed manufacturing cost is:
A) $221,200
B) $391,800
C) $173,800
D) $126,400
Fixed Manufacturing Cost
Costs that do not change with the level of production, such as rent, salaries, and insurance.
- Ascertain the total financial outlay, variable cost for each unit, unchanging costs, and contribution margin utilizing cost-volume-profit (CVP) analysis.
Verified Answer
AN
Afreen NawabJul 25, 2024
Final Answer :
D
Explanation :
Total manufacturing overhead at 2,000 units = 2,000 units × $86.90 per unit = $173,800
Total manufacturing overhead at 4,000 units = 4,000 units × $55.30 per unit = $221,200 Variable cost per unit = Change in cost ÷ Change in activity
= $47,400 ÷ 2,000 units
= $23.70 per unit
Fixed cost = Total cost - Variable cost element
= $221,200 - ($23.70 per unit × 4,000 units)
= $221,200 - $94,800
= $126,400
Total manufacturing overhead at 4,000 units = 4,000 units × $55.30 per unit = $221,200 Variable cost per unit = Change in cost ÷ Change in activity
= $47,400 ÷ 2,000 units
= $23.70 per unit
Fixed cost = Total cost - Variable cost element
= $221,200 - ($23.70 per unit × 4,000 units)
= $221,200 - $94,800
= $126,400
Learning Objectives
- Ascertain the total financial outlay, variable cost for each unit, unchanging costs, and contribution margin utilizing cost-volume-profit (CVP) analysis.
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