Carbaugh Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total cost to manufacture 3,300 units is closest to:
A)$637,560
B)$612,975
C)$588,390
D)$619,680

Question

Carbaugh Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product.  The best estimate of the total cost to manufacture 3,300 units is closest to:
A)$637,560 
B)$612,975 
C)$588,390 
D)$619,680

Quizplus · Accepted Answer

Total manufacturing overhead at 4,000 units = 4,000 units F1F1F1S1F1F1F10 $55.20 per unit = $220,800
Total manufacturing overhead at 3,000 units = 3,000 units F1F1F1S1F1F1F10 $70.10 per unit = $210,300
Variable manufacturing overhead per unit = Change in cost F1F1F1S1F1F1F10 Change in activity
= ($220,800 - $210,300)F1F1F1S1F1F1F10 (4,000 units - 3,000 units)
= $10,500 F1F1F1S1F1F1F10 1,000 units
= $10.50 per unit
Fixed cost element of manufacturing overhead = Total cost - Variable cost element
= $220,800 - 4,000 units F1F1F1S1F1F1F10 $10.50 per unit
= $220,800 - $42,000
= $178,800
Total variable manufacturing cost = Direct materials + Direct labor + Manufacturing overhead
= $73.90 per unit + $49.20 per unit + $10.50 per unit
= $133.60 per unit
Total manufacturing cost = Total manufacturing cost per unit F1F1F1S1F1F1F10 Total units manufactured + Total fixed manufacturing cost
= $133.60 per unit F1F1F1S1F1F1F10 3,300 units + $178,800
= $440,880+ $178,800
= $619,680

Carbaugh Corporation Has Provided the Following Production and Average Cost