X Company manufactures a single product and estimates total manufacturing costs

Question

X Company manufactures a single product and estimates total manufacturing costs each month. The accountant provides the following information about its manufacturing process:

1. The monthly overhead cost function is $3,500+$1.90X, where X is the number of units produced. If X Company expects to produce 980 units in March, what are estimated total manufacturing costs for for March?

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Direct material quantity 1.1 pounds per unit of finished product Direct material price $22.00 per pound Direct labor time 2.0 hours per unit of finished product Direct labor wage rate $12.50 per hour

Explanation / Answer

DIRECT MATERIAL COST (980 * 1.1) * $22 $23716 DIRECT LABOUR COST (980 * 2) * $12.50 $24500 OVERHEAD [$3500 + ($1.90 * 980] $5362 TOTAL MANUFACTURING COST $53578

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