Dake Corporation's relevant range of activity is 2,800 units to 6,000 units. When it produces and...

Dake Corporation's relevant range of activity is 2,800 units to 6,000 units. When it produces and sells 4,400 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	6.95
Direct labor	$	3.00
Variable manufacturing overhead	$	1.70
Fixed manufacturing overhead	$	2.50
Fixed selling expense	$	1.00
Fixed administrative expense	$	0.70
Sales commissions	$	0.80
Variable administrative expense	$	0.70

For financial reporting purposes, the total amount of product costs incurred to make 4,400 units is closest to:

Multiple Choice

$62,260
$51,260
$68,860
$11,000

Expert Solution

· Correct Answer = Option #1: $ 62,260

	Direct materials	$6.95
	Direct Labor	$3.00
	Variable manufacturing overhead	$1.70
	Fixed manufacturing overhead	$2.50
A	Total product cost per unit	$14.15
B	Units produced	4,400
C = A x B	Total amount of product cost	$62,260

Product Cost
Absorption Costing [financial reporting]	Variable Costing [managerial reporting]
Direct material	Direct material
Direct Labor	Direct Labor
Variable manufacturing overhead	Variable manufacturing overhead
Fixed manufacturing overhead applied	-

>Selling, General and administrative expenses (BOTH Variable and Fixed) DO NOT FORM part of product cost.

ekkarill92 answered 2 years ago

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