Problem 7

Martinez Companys relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$ 6.00
Direct labor	$ 3.50
Variable manufacturing overhead	$ 1.50
Fixed manufacturing overhead	$ 4.00
Fixed selling expense	$ 3.00
Fixed administrative expense	$ 2.00
Sales commissions	$ 1.00
Variable administrative expense	$ 0.50

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?