dake corporation's relevant range of activity is 4,500 units to 8,500 units. when it produces and sells 6,500 units, its average costs per unit are as follows: average cost per unit direct materials $ 6.40 direct labor $ 3.50 variable manufacturing overhead $ 2.00 fixed manufacturing overhead $ 2.20 fixed selling expense $ 0.90 fixed administrative expense $ 0.60 sales commissions $ 0.70 variable administrative expense $ 0.60 if 5,500 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

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The total amount of indirect manufacturing cost incurred is closest to $25,300

What are Indirect Manufacturing Costs?

  • Production expenses that can't be immediately linked to a produced unit are referred to as indirect manufacturing costs. These expenses include, for instance, those for supplies, depreciation, utilities, production supervisor salaries, and equipment maintenance.
  • Indirect manufacturing expenses are gathered into a pool of overhead costs for financial reporting and distributed according to the quantity of units produced during a reporting period; this process results in some capitalization of these costs into the inventory asset.
  • Managerial accountants are required to record these expenses in an account and then divide them among the products generated. These expenses are a significant portion of the overall production costs, to put it briefly.

Total Indirect Manufacturing Overhead = Depreciation + Repairs and Maintenance + Office Electricity Expense + Salaries + Factory supplies

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