X Company manufactures a single product and estimates total manufacturing costs

Question

X Company manufactures a single product and estimates total manufacturing costs each month. The accountant provides the following information about its manufacturing process:

Question:
The monthly overhead cost function is $3,500+$2.20X, where X is the number of units produced. If X Company expects to produce 1,040 units in March, what are estimated total manufacturing costs for for March?

Direct material quantity 2.5 pounds per unit of finished product Direct material price $20.60 per pound Direct labor time 2.0 hours per unit of finished product Direct labor wage rate $12.80 per hour

Explanation / Answer

X Company expects to produce 1,040 units in March Hence, the total Manufacturing Costs for March will be worked out as under : (All amounts in $) Quantity = 1,040 units Particulars Direct Materials = 2.5 X $ 20.60 X 1,040 = 53560 Direct Labour = 2 X $ 12.80 X 1,040 = 26624 Overheads = 3,500 + $ 2.20 X 1,040 = 5788 Total Manufacturing Costs for 1,040 units 85972

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