The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product:
-The best estimate of the total monthly fixed manufacturing cost is:
A)$25,600
B)$114,400
C)$47,700
D)$69,800

Question

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: 
-The best estimate of the total monthly fixed manufacturing cost is:
A)$25,600 
B)$114,400 
C)$47,700 
D)$69,800

Quizplus · Accepted Answer

Total manufacturing overhead at 1,000 units = 1,000 units F1F1F1S1F1F1F10 $47.70 per unit = $47,700
Total manufacturing overhead at 2,000 units = 2,000 units F1F1F1S1F1F1F10 $34.90 per unit = $69,800
 11eaa48f_7c08_042a_9e4a_81455d78697a_TB2485_00 Variable cost per unit = Change in cost F1F1F1S1F1F1F10 Change in activity
= $22,100 F1F1F1S1F1F1F10 1,000 units
= $22.10 per unit
Fixed cost = Total cost - Variable cost element
= $69,800 - ($22.10 per unit F1F1F1S1F1F1F10 2,000 units)
= $69,800 - $44,200
= $25,600

The Following Production and Average Cost Data for Two Levels