Ridez Manufacturing currently produces 1,000 bicycles per month.The following per unit data apply for sales to regular customers: $\begin{array}{lr}
\text { Direct materials } & \$ 50 \
\text { Direct manufacturing labor } & 8 \
\text { Variable manufacturing overhead } & 12 \
\text { Fixed manufacturing overhead } & \underline{15} \
{\text { Total manufacturing costs }} & \$ 85
\end{array}$ The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles.What is the per unit cost of producing 2,000 bicycles?
A) $78.50 per unit
B) $170 per unit
C) $72.50 per unit
D) $77.50 per unit

Question

Quizplus · Accepted Answer

The per unit cost at 2,000 bicycles includes direct materials ($50), direct labor ($8), variable overhead ($12), and fixed overhead ($15/2 = $7.50, since fixed costs are spread over more units). Total = $77.50.

Ridez Manufacturing Currently Produces 1,000 Bicycles Per Month The Plant Has Capacity for 3,000 Bicycles and Is Considering