Question

Schonhardt Corporation's relevant range of activity is 2,500 units to 5,500 units. When it produces and sells 4,000 units, its average costs per unit are as follows:

Average
Cost per Unit
Direct materials $ 7.60
Direct labor $ 2.90
Variable manufacturing overhead $ 1.65
Fixed manufacturing overhead $ 2.90
Fixed selling expense $ 0.95
Fixed administrative expense $ 0.65
Sales commissions $ 0.75
Variable administrative expense $ 0.65

If 4,500 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

a $16,800
b $11,400
c $11,600
d $15,400

Answer 1

c $11,600

Step-by-step explanation:

At 4,000 units the unit cost for the fixed manufacturing overhead is 2.90 dollars

We multiply it by 4,000 to know the total amount

$2.90 x 4,000 units = $ 11,600

These will be fixed cost thus, will not change when we produce between the relevant rage of 2,500 to 5,500 units