The following data pertains to activity and costs for two months: Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was:
A)$10, 000
B)$11, 700
C)$19, 000
D)$9, 300

Question

The following data pertains to activity and costs for two months:  Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was:
A)$10, 000 
B)$11, 700 
C)$19, 000 
D)$9, 300

Quizplus · Accepted Answer

Direct materials per unit = $16, 000 ÷ 10, 000 units = $1.60 per unit
Total direct materials cost in July = $1.60 per unit × 12, 000 units = $19, 200
Fixed factory rent = $12, 000 (given)
Total cost = Direct materials + Fixed factory rent + Manufacturing overhead
$42, 900 = $19, 200 + $12, 000 + Manufacturing overhead
Manufacturing overhead = $70, 000 - ($19, 200 + $12, 000)
= $42, 900 - $31, 200
= $11, 700

The Following Data Pertains to Activity and Costs for Two