1. Schwiesow Corporation has provided the following information: The incremental
ID: 2532147 • Letter: 1
Question
1. Schwiesow Corporation has provided the following information:
The incremental manufacturing cost that the company will incur if it increases production from 5,000 to 5,001 units is closest to:
Multiple Choice
$14.40
$15.10
$16.90
$12.20
2.
Krier Corporation uses a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $738,000 and 30,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $792,000 and 31,500 total direct labor-hours during the period.
The predetermined overhead rate is closest to:
Multiple Choice
$26.40
$25.14
$23.43
$24.60
Cost per Unit Cost per Period Direct materials $ 7.05 Direct labor $ 3.50 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 11,000 Sales commissions $ 1.00 Variable administrative expense $ 0.40 Fixed selling and administrative expense $ 5,500Explanation / Answer
Question 1
The incremental manufacturing cost is only the variable costs that the Company would incur in relation to the manufacture, since Fixed costs would not increase as a result of the additional production. Hence, it is computed as:+
Direct Material + Direct Labour + Variable Manf. Overhead = 7.05 + 2.5 + 1.65 = 11.2
Hence the Answer is closes to 12.2
Question 2
The predetermined fixed overhead rate is 738000/30000 = 24.6.
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