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10 August, 16:42

Mount Company incurred a total cost of $8,600 to produce 400 units of pulp. Each unit of pulp required 5 direct labor hours to complete. What is the total fixed cost if the variable cost was $1.50 per direct labor-hour? A. $2,600 B. $5,600 C. $1,700 D. $4,100

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  1. 10 August, 16:55
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    The correct answer is option (B).

    Explanation:

    According to the scenario, the given data are as follows:

    Total cost = $8,600

    Total units = 400 Units

    Direct labor hour per unit = 5

    Variable cost = $1.50

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

    Fixed cost = Total cost - Total Direct labor cost

    Where, Total direct labor cost = $1.50 * 5 * 400 = $3,000

    By putting the value in the formula, we get

    Fixed cost = $8,600 - $3,000

    = $5,600
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Home » Business » Mount Company incurred a total cost of $8,600 to produce 400 units of pulp. Each unit of pulp required 5 direct labor hours to complete. What is the total fixed cost if the variable cost was $1.50 per direct labor-hour? A. $2,600 B. $5,600 C.
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