Chapter-Quiz 3 (Cumulative) Help Save& ExitSubmit 3 Schonhardt Corporation\'s re

Question

Chapter-Quiz 3 (Cumulative) Help Save& ExitSubmit 3 Schonhardt Corporation's relevant range of activity is 2.900 units to 7.500 units. When it produces and sells 5.200 units, s average costs per unit are as follows Average Unit $7.20 $3.40 Variable manufacturing overhead $1.25 Fixed manufacturing overhead 3.50 Direet materials Direct labor $0.85 Fixed selling expense Fixed administrative expense Sales comissions $0.55 S0-65 Variable administrative expense $o.55 r6.500 units are produced, the total amount of fixed manufacturing cost incurred is closest to: Mutiple Choice 1460

Explanation / Answer

3.) The correct answer is $18200

The range of the company is 2900 units to 7500 units so fixed manufacturing cost will be same in this relevent range . How ever per unit fixed cost will be less at 7500 units and per unit fixed cost will be high at 2900 units. but in total fixed manufacturing cost will be same for 2900 units to 7500 units. So fixed manufacturing cost per unit is $3.50 . Total cost will be $3.50*5200 units =$18200

4.) The correct answer is $68800

conversion cost is sum of direct labour and manufacturing overhead

conversion cost= direct labour cost+ manufacturing overhead

direct labour cost is 40% of conversion cost means 60% of cconversion cost is manufacturing overhead.

by unitary method

60%=$103200(given)

total conversion cost= ($103200*100%)/60%=$172000

direct labour is 40% of conversion cost

$172000*40%=$68800

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