Question

The following information provides the amount of cost incurred in August for the cost items indicated. During August, 7,700 units of the firm's single product were manufactured. Raw materials $ 41,800 Factory depreciation expense 40,500 Direct labor 99,500 Production supervisor's salary 6,200 Computer rental expense 4,000 Maintenance supplies used 900 Required: How much cost would you expect to be incurred for each of these items during September when 9,100 units of the product are planned for production? (Do not round intermediate calculations.) b-Calculate the average total cost per unit for the 7,700 units manufactured in August. (Do not round intermediate calculations. Round your answer to 2 decimal places.) It is meaningful to use the average total cost figure in to predict the cost in subsequent months?

Answer 1

Answer

Requirement a-

Total cost for 9100 units = $218590.91

Requirement b-

Average cost of 7700 units produced = $25.05

Working

	For 7700 Units	For 9100 Units
Variable cost of production
Raw material	$      41,800.00	$      49,400.00
Direct labor	$      99,500.00	$ 1,17,590.91
Fixed cost of Production
Factory depreciation expense	$      40,500.00	$      40,500.00
Production supervisor's salary	$        6,200.00	$        6,200.00
Computer rental expense	$        4,000.00	$        4,000.00
Maintenance supplies used	$            900.00	$            900.00
Total Cost	$ 1,92,900.00	$ 2,18,590.91
Units produced	7,700	9100
Average cost	$              25.05	$              24.02