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13 July, 01:37

The following data pertains to activity and costs for two months: June July Activity level in units 10,000 11,000 Direct materials $ 17,000 $? Fixed factory rent 21,000? Other production costs 20,000? Total cost $ 58,000 $ 61,300 Assuming that these activity levels are within the relevant range, the other production costs for July were: (Round intermediate calculations to 2 decimal places.)

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  1. 13 July, 01:40
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    The correct answer is $21,600.

    Explanation:

    According to the scenario, the computation can be done as follows:

    First we find the direct material per unit:

    Direct material / unit = Total cost / Units

    =$17,000/10,000

    =$1.7 per unit

    So, Direct material cost for 11,000 units = 11,000 * $1.7 = $18,700

    Since factory rent is a fixed cost, so it remain same as June month = $21,000

    So, we can calculate the other production cost by using following formula:

    Other production cost = Total cost - Direct material cost - Factory rent

    = $61,300 - $18,700 - $21,000

    = $21,600

    Hence, other production cost for July month is $21,600.
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