Question

Kubin Company's relevant range of production is 23,000 to 27,500 units. When it produces and sells 25,250 units, its average costs per unit are as follows

Direct Materials	$8.30
Direct Labor	$5.30
Variable Manufacturing Overhead	$2.80
Fixed Manufacturing Overhead	$6.30
Fixed Selling Expense	$4.80
Fixed Administrative Expense	$3.80
Sales Commissions	$2.30
Variable Administrative Expense	$1.80

Required

1. If 23,000 units are produced and sold, what is the variable cost per unit produced and sold?

2. If 27,500 units are produced and sold, what is the variable cost per unit produced and sold?

3. If 23,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

4. If 27,500 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

5. If 23,000 units are produced, what is the average fixed manufacturing cost per unit produced

6. If 27,500 units are produced, what is the average fixed manufacturing cost per unit produced

7. If 23,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this?

8. If 27,500 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this?

(Round per unit values to 2 decimal places)

Answer 1

1) Variable cost per unit sold = 8.3+5.3+2.8+2.3+1.8 = 20.50

2) Variable cost per unit sold = 20.50

3) Total amount of variable cost = 20.50*23000 = 471500

4) Total amount of variable cost = 20.50*27500 = 563750

5) Average fixed manufacturing cost per unit = (25250*6.3)/23000 = 6.92

6) Average fixed manufacturing cost per unit = (25250*6.3)/27500 = 5.78

7) Total fixed manufacturing overhead = 25250*6.3 = 159075

8) Total fixed manufacturing overhead = 159075