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:

The monthly overhead cost function is $3,900+$1.80X, where X is the number of units produced. If X Company expects to produce 1,000 units in March, what are estimated total manufacturing costs for for March?

Direct material quantity 2.7 pounds per unit of finished product Direct material price $23.00 per pound Direct labor time 1.7 hours per unit of finished product Direct labor wage rate $12.90 per hour

Explanation / Answer

Total Manufacturing cost calculation per unit 1000 units Direct Material (2.7 x $23) $ 62.10 $ 62,100 Direct Labor (1.7 x $12.9) $ 21.93 $ 21,930 Overhead rate Variable overheads $ 1.80 $ 1,800 Fixed Overheads $ 3,900 Total Manufacturing cost $ 89,730

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