Question

morrison company's relevant range of production is 7500 units to 12500 units. when it produces and...

morrison company's relevant range of production is 7500 units to 12500 units. when it produces and sells 10000 units, its units costs are as following:

variable manufacturing cost (DM,DL, OH) $11.8

fixed manufacturing overhead $6

fixed selling and admin expense $ 7.2

variable selling and admin exoense$1.5

total product costs and period costs when morrison company products and sell 12000 units are:

product cost period cost

A 213600 104400

B 201600 104400

C 201600 90000

D 159600 158400

E none of the above

Business   Accounting   
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Answer #1
Computation of product cost : Product cost = Variable manufacturing cost + fixed manufacturing cost
variable manufacturing cost (DM,DL, OH) 11.8 141600 =11.8*12000
fixed manufacturing overhead 6 60000 =6*10000
201600
Computation of period cost = Cost other than manufacturing cost which are charged to profit and loss account
Period cost
fixed selling and admin expense 7.2 72000 =7.2*10000
variable selling and admin exoense 1.5 18000 =1.5*12000
90000
Note : Fixed cost will be calculated using 10000 unit while variable cost will be based on 12000 unit
therefore correct answer is option C : 201600, 90000
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