If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $16,300
B) $25,600
C) $19,400
D) $13,200

Question

If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:A) $16,300B) $25,600C) $19,400D) $13,200

Landry Edwards · Accepted Answer

Final Answer : C, Explanation :  To calculate the total amount of manufacturing overhead cost, we need to use the predetermined overhead rate.Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total amount of the allocation baseFrom the information given in the problem, we know that the estimated total manufacturing overhead cost is $77,600 and the estimated total amount of the allocation base is 8,000 direct labor hours.Predetermined overhead rate = $77,600 / 8,000 direct labor hours = $9.70 per direct labor hourTo calculate the total amount of manufacturing overhead cost for 4,000 units, we need to know the total amount of direct labor hours required to produce these units. Let's assume that the estimated direct labor hours per unit is 2 hours.Total direct labor hours = 4,000 units x 2 hours per unit = 8,000 direct labor hoursTotal amount of manufacturing overhead cost = Predetermined overhead rate x Total direct labor hoursTotal amount of manufacturing overhead cost = $9.70 per direct labor hour x 8,000 direct labor hours = $77,600Therefore, the total amount of manufacturing overhead cost for 4,000 units is closest to $19,400 (choice C).

If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $16,300
B) $25,600
C) $19,400
D) $13,200

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