Question

Anderson Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume 4,000 units 5,000 units Direct materials $99.20 per unit $99.20 per unit Direct labor $45.50 per unit $45.50 per unit Manufacturing overhead $94.00 per unit $77.60 per unit The best estimate of the total monthly fixed manufacturing cost is _______.

Answer 1

Answer:

The total monthly fixed manufacturing cost is $328,000.

Explanation:

For 4000 units, The direct materials cost is $99.2 per unit, the direct labor cost is $45.5 per unit, the manufacturing overhead cost is $94.

For 5000 units, The direct materials cost is $99.2 per unit, the direct labor cost is $45.5 per unit, the manufacturing overhead cost is $77.6.

Total manufacturing overhead for 4,000 units

= $4,000\ \times\ 94$

= $376,000

Total manufacturing overhead for 5,000 units

= $5,000\ \times\ 77.6$

= $388,000

The variable cost per unit

= $\frac{388,000\ -\ 376,000}{1,000}$

= $12 per unit

Fixed costs

= Total cost - Total variable costs

= $388,000\ -\ (5,000\ \times\ 12)$

= $328,000