Jainex Company produces retractable pens. November budgeted production costs are
ID: 2970812 • Letter: J
Question
Jainex Company produces retractable pens. November budgeted production costs are given below:
Pens to be produced
80,000
Direct material (variable)
$20,000
Direct Labor (variable)
$40,000
Supplies (variable)
$20,000
Supervision (fixed)
$30,000
Depreciation (fixed)
$25,000
Other (fixed)
$5,000
In December, Jainex expects to produce 100,000 pens. Assuming no structural changes, what is Jainex's budgeted production cost per pen for December?
A $1.54
B $1.60
C $1.72
D $1.85
Jainex Company produces retractable pens. November budgeted production costs are given below:
Pens to be produced
80,000
Direct material (variable)
$20,000
Direct Labor (variable)
$40,000
Supplies (variable)
$20,000
Supervision (fixed)
$30,000
Depreciation (fixed)
$25,000
Other (fixed)
$5,000
In December, Jainex expects to produce 100,000 pens. Assuming no structural changes, what is Jainex's budgeted production cost per pen for December?
A $1.54
B $1.60
C $1.72
D $1.85
Explanation / Answer
For 100,000 pens variable will change but not the fixed
Pens to be produced
100,000
Direct material (variable)
$20,000 /80*100 = 25,000
Direct Labor (variable)
$40,000 /80*100 = 50,000
Supplies (variable)
$20,000 /80*100 = 25,000
Supervision (fixed)
$30,000
Depreciation (fixed)
$25,000
Other (fixed)
$5,000
Total adding = 160,000
So per pen = 160,000/100,000 = 1.6 . (B) is the answer
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