Wilson Publishing produces self-help books for struggling accounting majors. Wilson’s current publishing facility has the capacity to produce a maximum of 5,000 books per month. The following data is for the month of January 2015:
| Number of Units produced | 4,200 |
| Variable cost per unit | $2.50 |
| Fixed cost per unit | $3.00 |
| Total manufacturing cost per unit | $5.50 |
| Sales price per unit | $135.00 |
A. If February 2015 production increases to 6,500 units, what will be Wilson’s new total manufacturing cost and total manufacturing cost per unit?
nswer : February 2015 production increases to 6,500 units, Wilson’s new total manufacturing cost and total manufacturing cost per unit will be = 4.44
working notes for the above answer is as follow
We have provided with the procuction figure for 4,200 units and now we have to find out the production cost for 6,500 units for february
Product costs = Direct materials + Direct labor + Manufacturing overhead
Variable cost per unit = $ 2.50
Fixed cost per unit = $ 3.00
So total fiixed cost is $ 3.00 * 4200
total fiixed cost is = $ 12,600
If February 2015 production increases to 6,500 units, Wilson’s new total manufacturing cost and total manufacturing cost per unit will be as follow
| Decsription | Total | Per unit |
| Unit produced | 6,500 | |
| Variable cost | 16,250 | 2.5 |
| Fixed cost | 12,600 | 1.94 |
| Total Manu.cost | 28,850 | 4.44 |
Total fixed cost remain same with any level of production so total fixed cost remain as it is and per unit fixed cost will be decreased
Variable cost will change with the chane in the level of production
February 2015 production increases to 6,500 units, Wilson’s new total manufacturing cost and total manufacturing cost per unit will be = 4.44
