Question

Dake Corporation's relevant range of activity is 4,000 units to 7,500 units. When it produces and sells 5,750 units, its average costs per unit are as follows:

Direct materials $ 7.10

Direct labor $ 3.30

Variable manufacturing overhead $ 1.90

Fixed manufacturing overhead $ 3.60

Fixed selling expense $ 0.80

Fixed administrative expense $ 0.50

Sales commissions $ 0.60

Variable administrative expense $ 0.50

If 4,750 units are produced, the total amount of direct manufacturing cost incurred is:

Answer 1

Direct materials per unit = $7.10

Direct labor per unit = $3.30

Variable manufacturing overhead = $1.90

Fixed manufacturing overhead per unit when 5,750 units are produced= $3.60

Total Fixed manufacturing overhead = 5,750 x 3.60

= $20,700

Calculation of total direct manufacturing cost when 4,750 units are produced:

Direct materials (4,750 x 7.10)	33,725
Direct labor (4,750 x 3.30)	15,675
Total direct manufacturing overhead	$49,400

If 4,750 units are produced, the total amount of direct manufacturing cost incurred is:$49,400

First option is correct.