Question

Learned Corporation has provided the following information:

	Cost per Unit			Cost per Period
Direct materials	$	6.10
Direct labor	$	4.15
Variable manufacturing overhead	$	1.75
Fixed manufacturing overhead				$	27,600
Sales commissions	$	0.50
Variable administrative expense	$	0.40
Fixed selling and administrative expense				$	7,800

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units?
b. For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units?
c. If the selling price is $23.60 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)
d. If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred?
e. If 7,000 units are produced, what is the total amount of indirect manufacturing costs incurred?

Answer 1

Requirement a
Particulars	Price Per Unit	Calculation	Total
Direct Materials	$6.10	6000*$6.10	36,600
Direct labor	$4.15	6000*$4.15	24,900
Variable manufacturing Overhead	$1.75	6000*$1.75	10,500
Fixed manufacturing Overhead			27,600
Product Cost			99,600
Requirement b
Particulars	Price Per Unit	Calculation	Total
Sales Commission	$0.50	6000*$0.50	3,000
Variable Administrative expenses	$0.40	6000*$0.40	2,400
Fixed Selling and Administrative Expenses			7,800
Period Cost			13,200
Requirement c
Particulars	Amount	Amount
Selling Price		23.60
Variable cost:
Direct materials per unit	6.10
Direct labor cost per Unit	4.15
Variable manufacturing Overhead	1.75
Sales Commission	0.50
Variable Administrative Expenses	0.40	-12.90
Contribution margin Per Unit		10.70
Requirement d
Particulars	Per Unit Price	Calculation	Total
Direct Materials	$6.10	7000*$6.10	42,700
Direct labor	$4.50	7000*$4.15	29,050
Direct Manufacturing Cost			71,750
Requirement e
Particulars	Per Unit Price	Calculation	Total
Variable manufacturing Overhead	$1.75	7000*$1.75	12,250
Fixed manufacturing Overhead			27,600
Indirect Manufacturing Cost			39,850