Carbert 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 4,300 units is closest to:
A)$899,345
B)$951,160
C)$847,530
D)$915,010

Question

Carbert 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 4,300 units is closest to:
A)$899,345 
B)$951,160 
C)$847,530 
D)$915,010

Quizplus · Accepted Answer

Direct materials and direct labor are entirely variable since cost per unit does not change with changes in volume.Thus none of these costs are fixed and only manufacturing overhead is used to calculate the monthly fixed manufacturing cost.
To calculate the variable manufacturing cost per unit:
 11eaaee8_6798_bc66_933a_edf25cfbecbd_TB5186_00 Variable manufacturing overhead cost = Change in cost F1F1F1S1F1F1F10 Change in activity
= ($553,500 - $539,200) F1F1F1S1F1F1F10 (5,000 - 4,000) = $14.30
Fixed cost element of manufacturing overhead = Total cost - Variable cost element
= $553,500 - ($14.30 F1F1F1S1F1F1F10 5,000) = $482,000
 11eaaee8_6798_bc67_933a_5d140835d937_TB5186_00

Carbert Corporation Has Provided the Following Production and Average Cost