Question

Martinez Company’s 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 $ 5.70 Direct labor $ 3.20 Variable manufacturing overhead $ 1.60 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 2.70 Fixed administrative expense $ 2.10 Sales commissions $ 1.10 Variable administrative expense $ 0.55

5. If 8,000 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.)

6. If 12,500 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.)

9.If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

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

14.If 12,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production? (Do not round intermediate calculations.)

Answer 1

Variable Costs per Unit = Direct Materials Cost per Unit + Direct Labour Cost per Unit + Variable Manufacturing Overhead per Unit + Variable Administrative Expense per Unit + Sales Commission

Variable Cost per Unit = 5.70 + 3.20 + 1.60 + 0.55 + 1.10

Variable Cost per Unit = $ 12.15

Question 5

Total Variable Cost for 8,000 Units = Variable Cost per Unit * 8,000 Units

Total Variable Cost for 8,000 Units = 12.15 * 8,000

Total Variable Cost for 8,000 Units = $ 97,200

Question 6

Total Variable Cost for 12,500 Units = Variable Cost per Unit * 12,500 Units

Total Variable Cost for 12,500 Units = 12.15 * 12,500

Total Variable Cost for 12,500 Units = $ 151,875

Fixed Manufacturing Costs = Fixed Manufacturing Cost per Unit * 10,000 Units

Fixed Manufacturing Cost per Unit = $ 4

Fixed Manufacturing Costs = 10,000 * 4

Fixed Manufacturing Costs = $ 40,000

Question 9

Total Fixed Manufacturing Costs at the level of 8,000 Units will be $ 40,000 as the fixed Manufacturing Costs remain same within a respective range of production so it will remain same whether there will be production of 8,000 Units or 10,000 Units.

Question 10

Total Fixed Manufacturing Costs at the level of 12,500 Units will be $ 40,000 as the fixed Manufacturing Costs remain same within a respective range of production volume level of output so it will remain same whether there will be production of 12,500 Units or 10,000 Units.

Question 14

Total Amount of Direct and Indirect Manufacturing Costs

Direct Materials Costs = 12,000 Units * 5.70 = $ 68,400

Direct Labour Costs = 12,000 Units * 3.20 = $ 38,400

Variable Manufacturing Overhead = 12,000 Units * 1.60 = $ 19,200

Fixed Manufacturing Overhead = $ 40,000

Total Amount of Direct and Indirect Manufacturing Costs = Direct Materials Cost + Direct Labour Costs + Variable Manufacturing Overhead + Fixed Manufacturing Overhead

Total Amount of Direct and Indirect Manufacturing Costs = 68,400 + 38,400 + 19,200 + 40,000 = $ 166,000