37) Landmann Corporation\'s relevant range of activity is 7,000 units to 11,000

Question

37) Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows Average Cost per Unit $ 6.35 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense 4.10 $ 1.35 $ 13.50 $ 2.25 $ 1.80 $ 1.00 $ 0.45 For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to: A) $227,700 B) $121,500 C) $106,200 D) $236,700

Explanation / Answer

Product costs = Direct materials + Direct labour + Variable manufacturing overhead + Fixed manufacturing overhead

= (6.35*9,000) + (4.1*9,000) + (1.35*9,000) + (13.5*9,000)

= 57,150 + 36,900 + 12,150 + 121,500

= 227,700

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