Question
In: Accounting
A company recorded the following production costs during the previous two-week period: Week 1 Week 2...
| A company recorded the following production costs during the previous two-week period: | |||||
| Week 1 | Week 2 | ||||
| Direct labor costs | 17,000 | 22,600 | |||
| Other manufacturing costs | 25,000 | 31,400 | |||
| Units produced | 5,000 | 7,000 | |||
| Assuming both weeks fall in the same relevant range, what was the total fixed cost during Week 1? | |||||
Solutions
Expert Solution
Variable direct labor cost per unit = Change in direct labor cost/ Change in units
= (22,600-17,000)/(7,000-5,000)
= 5,600/2,000
= $2.8
Variable direct labor cost for 5,000 units = Variable direct labor cost per unit x 5,000
= 2.8 x 5,000
= $14,000
Total direct labor costs for 5,000 units = $17,000
Fixed direct labor cost = Total direct labor costs for 5,000 units- Variable direct labor cost for 5,000 units
= 17,000-14,000
= $3,000
Variable manufacturing costs per unit = Change in manufacturing costs/ Change in units
= (31,400-25,000)/(7,000-5,000)
= 6,400/2,000
= $3.2
Variable manufacturing cost for 5,000 units = Variable manufacturing costs per unit x 5,000
= 3.2 x 5,000
= $16,000
Total manufacturing costs for 5,000 units = $25,000
Fixed manufacturing costs = Total manufacturing costs for 5,000 units- Variable manufacturing cost for 5,000 units
= 25,000-16,000
= $9,000
Total fixed cost = Fixed direct labor cost + Fixed manufacturing costs
= 3,000+9,000
= $12,000
The total fixed cost during Week 1 = $12,000
ekkarill92 answered 2 years agoRelated Solutions
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