Question

The plant has capacity for 4,000 tres and is considering expanding production to 3,000 tires. What is the total cost of producing 3,000 tires? A. $152.000 B. $208,000 C. $241,000 D. $261000

Answer 1

The total cost of producing 3,000 tires is $261,000.

How to get the total cost?

The total variable manufacturing cost for 3,000 tires

= Variable Manufacturing Cost per Unit * Number of Tires

= ($40 + $11 + $16) * 3,000

= $67 * 3,000

= $201,000

The fixed manufacturing overhead cost is $20 per unit. For 3,000 tires, the Overhead Cost will be:

= Fixed Manufacturing Overhead Cost per Unit × Number of Tires

= $20 * 3,000

= $60,000

Now, let's add the total variable manufacturing cost and the total fixed manufacturing overhead cost to find the total cost of producing 3,000 tires.

Total Cost of producing the tires is:

= Total Variable Manufacturing Cost + Total Fixed Manufacturing Overhead Cost

= $201,000 + $60,000

= $261,000.

Therefore, the Option D is correct.

Full question:

The full question is attached as picture below.