ABC Company makes a single product. Expected manufacturing costs are as follows:
ID: 2437292 • Letter: A
Question
ABC Company makes a single product. Expected manufacturing costs are as follows:
Variable costs
Direct materials $6.50 per unit
Direct labor 2.40 per unit
Manufacturing overhead 1.10 per unit
Fixed costs per month
Supervisory salaries $13,600
Depreciation 5,500
Other fixed costs 2,200
Determine the amount of manufacturing costs for a flexible budget level of 3,200 units per month.
Explanation / Answer
NOTE:Variable cost per unit and total fixed costs do not change with change in units.
Variable costs Direct materials($6.5*3200) $20800 Direct labor($2.4*3200) $7680 Manufacturing overhead($1.1*3200) $3520 Fixed costs: Supervisory salaries $13600 Depreciation $5500 Other fixed costs $2200.