Question

Meginnis 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 UnitDirect materials $5.20Direct labor $3.75Variable manufacturing overhead $1.65Fixed manufacturing overhead $2.60Fixed selling expense $0.50Fixed administrative expense $0.40Sales commissions $1.50Variable administrative expense $0.50If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:A) $79,200.B) $63,600.C) $62,700.D) $53,700.

Answer 1

Answer:

Direct manufacturing cost = $53,700

so correct option is D) $53,700

Explanation:

given data

range of activity = 3,000 units to 7,000 units

produces and sells = $5,000 units

Direct materials = $5.20

Direct labor=  $3.75

Variable manufacturing overhead  = $1.65

Fixed manufacturing overhead = $2.60

Fixed selling expense = $0.50

Fixed administrative expense = $0.40

Sales commissions = $1.50

Variable administrative expense = $0.50

to find out

total amount of direct manufacturing cost

solution

we get here Direct manufacturing cost that is express as

Direct manufacturing cost = (Direct material per unit + Direct labor per unit) ×  Units produced     ..................1

put here value we get

Direct manufacturing cost = ($5.20 + $3.75) × 6,000 units

 Direct manufacturing cost =  $8.95 × 6,000

  Direct manufacturing cost = $53,700

so correct option is D) $53,700