ABC Company makes a single product. Expected manufacturing costs are as follows:

Question

ABC Company makes a single product. Expected manufacturing costs are as follows:

Variable costs

      Direct materials                       $6.50 per unit

      Direct labor                                2.40 per unit

      Manufacturing overhead           1.10 per unit

Fixed costs per month

      Supervisory salaries                         $13,600

      Depreciation                                         5,500

      Other fixed costs                                  2,200

Determine the amount of manufacturing costs for a flexible budget level of 3,200 units per month.

Explanation / Answer

NOTE:Variable cost per unit and total fixed costs do not change with change in units.

Variable costs Direct materials($6.5*3200) $20800 Direct labor($2.4*3200) $7680 Manufacturing overhead($1.1*3200) $3520 Fixed costs: Supervisory salaries $13600 Depreciation $5500 Other fixed costs $2200.

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