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	$	6.90
Direct labor	$	4.40
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	4.00
Fixed selling expense	$	3.90
Fixed administrative expense	$	2.00
Sales commissions	$	1.00
Variable administrative expense	$	0.50

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units? (Do not round intermediate calculations.)

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units? (Do not round intermediate calculations.)

3. If 8,000 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)

4. If 12,500 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)

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.)

7. If 8,000 units are produced, what is the average fixed manufacturing cost per unit produced?

8. If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced? (Round your answer to 2 decimal places.)

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?

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.)

12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.)

13. If the selling price is $22.90 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

14. If 11,000 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.)

15. What incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units? (Round your answer to 2 decimal places.)

Answer 1

1)	Total amount of product cost
	Direct materials		6.9	10,000	=	69000
	Direct labor		4.4	10,000	=	44000
	VMOH		1.5	10,000	=	15000
	FMOH		4	10,000	=	40000
	Total amount of product cost					168000	answer
2)	Total amount of period cost
	Fixed selling expense		3.9	10,000	=	39000
	Fixed administrative exp		2	10,000	=	20000
	Sales commission		1	10,000	=	10000
	Variable adm expense		0.5	10,000	=	5000
	tota amount of period cost					74000	answer
3)	Variable cost per unit					14.3	answer
4)	Variable cost per unit					14.3	answer
5)	Total amount of variable cost for			8,000	units=	114400	answer
6)	Total amount of variable cost for			12,500	units=	178750	answer
7)	Average FMOH cost per unit produced
	4	*	10,000	/	8,000	=	5	answer
8)	Average FMOH cost per unit produced
	4	*	10,000	/	12,500	=	3.2	answer
9)	total Fixed manufacturing overhead cost
	5	*	8,000			=	40000	answer
10)	total Fixed manufacturing overhead cost
	3.2	*	12,500			=	40000	answer
11)	Total manufacturing overhead cpst
	VMOH		1.5	8,000	=	12000
	FMOH					40000
	Total manufacturing overhead cost					52000	answer
	total amount expressed on cost per unit basis					6.5	answer
12)	VMOH		1.5	12,500	=	18750
	FMOH					40000
	Total manufacturing overhead cost					58750	answer
	total amount expressed on cost per unit basis					4.7	answer
13)	Contribution margin per unit sold
	selling price per unit					22.9
	total variable cost per unit					14.3
	Contribution margin per unit sold					8.6	answer
14)	total amount of direct and indirect manufacturing costs
	Direct materials		6.9	11,000	=	75900
	Direct labor		4.4	11,000	=	48400
	VMOH		1.5	11,000	=	16500
	FMOH		4	10,000	=	40000
	Total amount of product cost					180800	answer
15)	incremental cost per unit product					12.8
	(Direct materials+direct labor+VMOH)