Dake Corporation\'s relevant range of activity is 2,500 units to 5,500 units. Wh

Question

Dake 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 $6.90 $2.90 $1.65 $2.90 $0.95 $0.65 $0.75 $0.65 1:01:20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Explanation / Answer

Direct Manufacturing Cost per Unit = Direct Material per unit + Direct Labor per unit
Direct Manufacturing Cost per unit = $6.90 + $2.90
Direct Manufacturing Cost per Unit = $9.8

Total Direct Manufacturing Cost = Units produced * Direct Manufacturing Cost per unit
Total Direct Manufacturing Cost = 3,000 * $9.8
Total Direct Manufacturing Cost = $29,400

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