Question

Martinez Company’s relevant range of production is 9,500 units to 14,500 units. When it produces and sells 12,000 units, its unit costs are as follows:

Amount Per Unit

Direct materials $ 5.40

Direct labor $ 2.90

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead$ 3.40

Fixed selling expense $ 2.40

Fixed administrative expense $ 2.10

Sales commissions $ 1.10

Variable administrative expense $ 0.55

1.) If the selling price is $21.40 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)

2.) If 13,000 units are produced, what are the total amount of direct manufacturing costs incurred to support this level of production?

3.) If 13,000 units are produced, what are the total amount of indirect manufacturing costs incurred to support this level of production? 4.) What total incremental cost will Martinez incur if it increases production from 12,000 to 12,001 units? (Round your answer to 2 decimal places.)

Answer 1