The following data pertains to activity and costs for two mo

The following data pertains to activity and costs for two months June July units..$16,000 0,000 12,000 12,000 Manufacturing overhead.. 10,000 $38,000 $42,900 Assuming that these activity levels are within the relevant range and the per unit cost for Direct Material remains constant the manufacturing overhead for July was

Solution

Solution:

Direct material cost per unit = $16,000 / 10000 = $1.60 per unit

Direct material cost for july = 12000 * $1.60 = $19,200

Fixed factory rent will remain the same for july i.e. = $12,000

Manufacturing overhead for July = Total cost - Direct material - Fixed factory rent

= $42,900 - $19,200 - $12,000 = $11,700