Question

Kubin Company’s relevant range of production is 25,000 to 33,500 units. When it produces and sells 29,250 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.50
Direct labor	$	5.50
Variable manufacturing overhead	$	3.00
Fixed manufacturing overhead	$	6.50
Fixed selling expense	$	5.00
Fixed administrative expense	$	4.00
Sales commissions	$	2.50
Variable administrative expense	$	2.00

Required:

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 29,250 units?

b. What is the total indirect manufacturing cost incurred to make 29,250 units?

2. Assume the cost object is the Manufacturing Department and that its total output is 29,250 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $117,000 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 29,250 units, what is the total direct selling expense that can be readily traced to individual sales representatives?

b. When the company sells 29,250 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 29,250 units? (Round per unit values to 2 decimal places.)

b. What is the total indirect manufacturing cost incurred to make 29,250 units? (Round per unit values to 2 decimal places.)

	1a. Direct materials per unit ? Direct labor per unit ? Direct manufacturing cost per unit $0.00 Number of units sold ? Total direct manufacturing cost $0 1b. Variable manufacturing overhead per unit. ? Fixed manufacturing overhead per unit ? Indirect manufacturing cost per unit $0.00 Number of units sold ? Total indirect manufacturing cost $0

	2a. Direct materials per unit ?? Direct labor per unit ?? Variable manufacturing overhead per unit ?? Fixed manufacturing overhead per unit Total manufacturing cost per unit $0.00 Number of units sold ?? Total direct costs $0 2b. Total indirect costs ??

	3a. Sales commissions per unit ?? Number of units sold ?? Total sales commission $0 Fixed portion of sales representatives’ compensation ?? Total direct selling expense $0 3b. The total indirect selling expense ??

Answer 1

1a	Direct material per unit	$8.5
	Direct labor per unit	5.5
	Direct manufacturing cost per unit	14
	Number of units sold	29,250
	Total direct manufacturing costs	$409,500
1b	Variable manufacturing overhead per unit	$3
	Fixed manufacturing overhead per unit	6.5
	Indirect manufacturing cost per unit	9.5
	Number of units sold	29,250
	Total indirect manufacturing costs	$277,875

2a	Direct material per unit	$8.5
	Direct labor per unit	5.5
	Variable manufacturing overhead per unit	3
	Fixed manufacturing overhead per unit	6.5
	Total manufacturing cost per unit	23.5
	Number of units sold	29,250
	Total direct costs	$687,375
2b	Total indirect costs	$0

3a	Sales commission per unit	$2.5
	Number of units sold	29,250
	Total sales commission	73,125
	Fixed portion of sales representatives compensation (29,250*$5 - $117,000)	29,250
	Total direct selling expense	$102,375
3b	Total indirect selling expense	$117,000