Question

Kubin Company’s relevant range of production is 26,000 to 35,500 units. When it produces and sells 30,750 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.60
Direct labor	$	5.60
Variable manufacturing overhead	$	3.10
Fixed manufacturing overhead	$	6.60
Fixed selling expense	$	5.10
Fixed administrative expense	$	4.10
Sales commissions	$	2.60
Variable administrative expense	$	2.10

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 30,750 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 30,750 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 35,500 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 26,000 units?

(For all requirements, do not round intermediate calculations.)

Answer 1

1) Total amount of product Costs to make 30,750 units	$734,925
2) Total amount of period costs incurred to sell 30,750 units	$427,425
3) Total amount of product costs to make 35,500 units	$817,100
4) Total amount of period costs to sell 26,000 units	$405,100

Working notes:

Product cost:	Per Unit	30,750 Units	35,500 Units
Direct Materials ($8.60 * 30,750); ($8.60 * 35,500) **	$8.60	$264,450	$305,300
Direct Labor ($5.60 * 30,750); ($5.60 * 35,500) **	$5.60	$172,200	$198,800
Variable Manufacturing overhead ($3.10 * 30,750); ($3.10 * 35,500) **	$3.10	$95,325	$110,050
Fixed Manufacturing overhead ($5.50 * 30,750) *	$6.60	$202,950	$202,950
Total Product cost per unit	$23.90	$734,925	$817,100
Period Cost per unit:	Per Unit	30,750 Units	26,000 Units
Fixed selling expense ($4 * 30,750) *	$5.10	$156,825	$156,825
Fixed administrative expense ($3 * 30,750) *	$4.10	$126,075	$126,075
Sales commissions ($1.50 * 30,750); ($1.50 * 26,000) **	$2.60	$79,950	$67,600
Variable administrative expense ($1 * 30,750); ($1 * 26,000) **	$2.10	$64,575	$54,600
Total Period Cost	$13.90	$427,425	$405,100
* Fixed expenses will not change due to change in the production.
** Variable expenses will change due to change in the sales units