Compute the fixed manufacturing overhead costs

Reference no: EM131761119

Question: Name on Request Company produces a single product called Thing. The company normally produces and sells 50,000 Things each year at a selling price of $50 per unit, The company's unit costs and total costs at this level is given below:

Direct Materials	Unit Cost $15	Total Cost $750,000
Direct Labor	8	400,000
Variable Manufacturing Overhead	3	150,000
Fixed Manufacturing Overhead	9	450,000
Variable Selling Expenses	4	200,000
Fixed Selling Expenses	6	300,000
Cost per Unit and Total Cost	$45	$2,250,000

1. Assume Name on Request Company has enough capacity to produce 75,000 Things per year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 30% above the present 50,000 units each year if it is willing to increase its advertising expense by $80,000. Would the increased expense be justified?

Please show all calculations.

Reference no: EM131761119

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