Question

fasheh corporations relevant range of activity is 7,000 units to 11,000 units. when it produces and sells 9,000 units, its average costs per unit are as follows:

average cost per unit
direct materials: $5.50
direct labor: $3.90
variable manufacturing overhead: $1.30
fixed manufacturing overhead: $13.50
fixed selling expense: $2.25
fixed administrative expense: $1.80
sales commissions: $0.50
variable administrative expense: $0.45

if 10,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:

multiple choice
$13.50
$12.83
$15.00
$12.15

Explanation:

Calculate total fixed manufacturing overhead

Using the Variable Cost Behavior knowledge point

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Calculate average fixed manufacturing cost per unit at 10,000 units

Determine the new unit rate.

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Answer:

• (A) $13.50
• (B) $12.83
• (C) $15.00
• (D) $12.15 (Correct answer)