Ken Washburn and Associates incurred total cost of $10,000 toproduce 500 custom

Question

Ken Washburn and Associates incurred total cost of $10,000 toproduce 500 custom mirrors. A total of 550 hours were required forthe production of the mirrors. Direct labor is variable and costs$10 per hour. How much fixed cost did Ken Washburn and Associatesincur? Ken Washburn and Associates incurred total cost of $10,000 toproduce 500 custom mirrors. A total of 550 hours were required forthe production of the mirrors. Direct labor is variable and costs$10 per hour. How much fixed cost did Ken Washburn and Associatesincur?

Explanation / Answer

Total Cost $10,000 Production of Numer ofMirrors 500 mirrors Labour Hours 550 hours Variable Cost $10 per hour TotalCost = Fixed Cost + Variable Cost Fixed Cost = Total Cost -Variable Cost Fixed Cost = $10,000 -[($10 * 550 hours)] Fixed Cost = $10,000 -$5,500 FixedCost = $4,500

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