Grip Manufacturing Currently Produces 1,000 Tires Per Month The Plant Has Capacity for 3,000 Tires and Is Considering

question 107

Multiple Choice

Grip Manufacturing currently produces 1,000 tires per month.The following per unit data for 1,000 tires apply for sales to regular customers: $$\begin{array} { l r } \text { Direct materials } & \$ 30 \\\text { Direct manufacturing labor } & 5 \\\text { Variable manufacturing overhead } & 8 \\\text { Fiæed manufacturing overhead } & \underline { 12 } \\\text { Total manufacturing costs } & \underline { \$ 55 }\end{array}$$ The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires.What is the total cost of producing 2,000 tires?

• A) $110,000
• B) $98,000
• C) $68,000
• D) $88,000

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