The following data pertains to activity and costs for two months: June July Activity level in units ... 10,000 12,000 Direct materials ... $16,000 $? Fixed factory rent ... 12,000? Manufacturing overhead ... 10,000? Total cost ... $38,000 $42,900 Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was: A) $10,000 B) $11,700 C) $19,000 D) $9,300

Question

Business

Piper Leblanc

9 February, 11:31

The following data pertains to activity and costs for two months: June July Activity level in units ... 10,000 12,000 Direct materials ... $16,000 $? Fixed factory rent ... 12,000? Manufacturing overhead ... 10,000? Total cost ... $38,000 $42,900 Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was: A) $10,000 B) $11,700 C) $19,000 D) $9,300

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Answers (1)

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Madeline · Answer 1

B) $11,700

Explanation:

The computation of the manufacturing overhead is shown below:

Total cost = Direct material + Fixed factory rent + Manufacturing overhead

where,

Direct material = July units * (direct material cost : June units)

= 12,000 units * ($16,000 : 10,000 units)

= $19,200

The other items values would remain the same.

Now put these values to the above formula

So, the value would equal to

$42,900 = $19,200 + $12,000 + Manufacturing overhead

$42,900 = $31,200 + Manufacturing overhead

So, manufacturing overhead = $11,700