Arman Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:??Average Cost per Unit?Direct materials$6.10?Direct labor$2.90?Variable manufacturing overhead$1.25?Fixed manufacturing overhead$3.00?Fixed selling expense$1.05?Fixed administrative expense$0.60?Sales commissions$1.50?Variable administrative expense$0.55Required:a. If 6,000 units are produced, what is the total amount of fixed manufacturing cost incurred?b. If 6,000 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis?c. If 4,000 units are produced, what is the total amount of direct manufacturing cost incurred?d. If 4,000

units are produced, what is the total amount of indirect manufacturing cost incurred?

What will be an ideal response?


a.

?Fixed manufacturing overhead per unit$3.00
?Number of units produced5,000
?Total fixed manufacturing overhead cost$15,000

b.
?Total variable manufacturing overhead cost 
($1.25 per unit x 6,000 units)
$7,500
?Total fixed manufacturing overhead cost 
($3.00 per unit x 5,000 units*)
15,000
?Total manufacturing overhead cost (a)$22,500
?Number of units produced (b)6,000
?Manufacturing overhead per unit (a) ÷ (b)$3.75
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 5,000 units.
c.
?Direct materials$6.10
?Direct labor2.90
?Direct manufacturing cost per unit (a)$9.00
?Number of units produced (b)4,000
?Total direct manufacturing cost (a) × (b)$36,000

d.
?Total variable manufacturing overhead cost 
($1.25 per unit x 4,000 units)
$5,000
?Total fixed manufacturing overhead cost
($3.00 per unit x 5,000 units*) 
15,000
?Total indirect manufacturing cost$20,000
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 5,000 units.

Business

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