Dake Corporation\'s relevant range of activity is 5,200 units to 6,000 units. Wh

Question

Dake Corporation's relevant range of activity is 5,200 units to 6,000 units. When it produces and sells 5,600 units, its average costs per unit are as follows:

If 5,500 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Multiple Choice

$56,925

$57,500

$73,600

$59,800

Average Cost per Unit Direct materials $ 6.55 Direct labor $ 3.80 Variable manufacturing overhead $ 2.15 Fixed manufacturing overhead $ 3.50 Fixed selling expense $ 1.05 Fixed administrative expense $ 0.75 Sales commissions $ 0.85 Variable administrative expense $ 0.75

Explanation / Answer

A. $56,925

Direct manufacturing cost per unit = Direct materials + Direct labor = $6.55 + $3.80 = $10.35

Total direct manufacturing cost = $10.35 * 5,500 = $56,925

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