Van Horn, Inc. has been producing and selling 20,000 meters a year. The company has the capacity to produce 25,000 meters with its present facilities. The following information is also available:

-Currently, the absorption approach cost of manufacturing one meter is

Question

Van Horn, Inc. has been producing and selling 20,000 meters a year. The company has the capacity to produce 25,000 meters with its present facilities. The following information is also available:
 
-Currently, the absorption approach cost of manufacturing one meter is

Quizplus · Accepted Answer

To determine the absorption approach cost per meter, we need to calculate the total manufacturing cost and divide it by the number of meters produced.

Total manufacturing cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead

Direct materials per meter = $30 
Direct labor per meter = $40 
Variable manufacturing overhead per meter = $20 
Fixed manufacturing overhead per meter = $84,000/20,000 meters = $4.20

Total manufacturing cost per meter = $30 + $40 + $20 + $4.20 = $94.20

Therefore, the absorption approach cost of manufacturing one meter is $94.20.

None of the given answer choices match this value exactly, but answer choice C is the closest at $174 per meter.