Kesterson Corporation has provided the following information: If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $8,100
B) $24,900
C) $22,100
D) $14,000

Question

Kesterson Corporation has provided the following information:  If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $8,100 
B) $24,900 
C) $22,100 
D) $14,000

Quizplus · Accepted Answer

To find the total amount of indirect manufacturing cost incurred, we need to use the predetermined indirect cost rate, which is $3.70 per direct labor hour. We also know that each unit requires 0.2 direct labor hours.

Therefore, the total amount of direct labor hours required to produce 6,000 units is:
6,000 units x 0.2 DLH per unit = 1,200 DLH

To find the total amount of indirect manufacturing cost incurred, we multiply the total DLH by the predetermined indirect cost rate:
1,200 DLH x $3.70 per DLH = $4,440

So, if 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to $4,440, which is closest to answer choice C.

Kesterson Corporation Has Provided the Following Information: If 6,000