Question

Dake Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $6.55 $3.50 $1.40 $2.60 $0.70 $0.40 $1.50 $0.45 For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to:

Answer 1

Correct answer--------$12,200

Working

Fixed selling expense	(4000 x 0.70)	$     2,800.00
Fixed administrative expenses	(4000 x 0.4)	$     1,600.00
sales commission	(4000 x 1.50)	$     6,000.00
variable administrative expense	(4000 x 0.45)	$     1,800.00
Total period cost		$ 12,200.00

Every cost other than factory cost are considered as period cost.