Respuesta :
The total amount of product costs incurred to make 20,000 units is
$ 350,000.
What is Product cost?
- The business incurs two types of costs when producing an item: production costs and period costs.
- Expenses associated with the production process directly are referred to as production costs. These expenses consist of labor, raw material, and overhead charges.
- The expense won't be incurred if the production is terminated. The cost of the product includes both the fixed production cost and all variable costs.
Calculation of product cost for producing 20,000 units:
Existing production costs for each unit:
Direct materials = $ 7.00
Direct labor = $ 4.00
Manufacturing variable overhead = $ 1.50
Fixed manufacturing overhead = $ 5.00
Total product cost per unit = Number of units produced × (Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead)
= $ 7.00 + $ 4.00+ $ 1.50 + $ 5.00 = $ 17.5
= 20,000 x $ 17.5 = $ 350,000
Hence, the total amount of product costs incurred to make 20,000 units is $ 350,000.
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