Question

The precision writing instruments company makes a high-end pen known as the cordova. materials cost per pen is $6. labor cost per pen is $5. production overhead is $1,000,000. advertising and promotion is $1,000,000. what is the total cost for sales of 500,000 units of the cordova design?

Answer 1

Total material cost for 500,000 units = 6 x 500,000 = $3,000,000

Total labor cost for 500,000 units = 5 x 500,000 = $2,500,000

Production overhead = $1,000,000

Advertising and promotion = $1,000,000

Hence

Total cost for 500,000 units of cordova design = 3,000,000 + 2,500,000 + 1,000,000 + 1,000,000 = $7,500,000