The Footy Company currently produces sandals in an automated process.Expected production per month is 20,000 units.The required direct materials cost is $1.50 per unit.Fixed overhead costs are $30,000 per month.The cost driver is units of production.What is the expected manufacturing cost of 15,000 units for one month?
A)$22,500
B)$45,000
C)$52,500
D)$88,000

Question

Quizplus · Accepted Answer

The total variable cost of producing 20,000 units is $1.50 x 20,000 = $30,000 per month.
The total cost of producing 15,000 units is expected to be ($1.50 x 15,000) + $30,000 = $52,500.
Therefore, the manufacturing cost of 15,000 units is $52,500. The correct answer is C.

The Footy Company Currently Produces Sandals in an Automated Process