Reference no: EM132527378

Dake Corporation's relevant range of activity is 2,000 units to 5,000 units. When it produces and sells 3,500 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials   $6.75

Direct labor             $3.90

Variable manufacturing overhead $1.50

Fixed manufacturing overhead    $4.00

Fixed selling expense                 $1.10

Fixed administrative expense        $0.80

Sales commissions                      $0.90

Variable administrative expense         $0.80

Question 1: If 2,500 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Multiple Choice

Option 1: $3,750

Option 2: $14,000

Option 3: $17,750

Option 4: $13,750