Question

Required information

Foundational [LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 2-6, LO 2-7]

[The following information applies to the questions displayed below.]

Martinez Company’s relevant range of production is 8,500 units to 13,500 units. When it produces and sells 11,000 units, its unit costs are as follows:

	Amount Per Unit
Direct materials	$	6.10
Direct labor	$	3.60
Variable manufacturing overhead	$	1.40
Fixed manufacturing overhead	$	4.10
Fixed selling expense	$	3.10
Fixed administrative expense	$	2.10
Sales commissions	$	1.10
Variable administrative expense	$	0.55

Foundational 2-1

Required:
1.	For financial accounting purposes, what is the total amount of product costs incurred to make 11,000 units?

      

Answer 1

Calculation of Total Product Cost
	Amount Per Unit	No. of units	Total Cost
Direct materials	6.1	11,000	67,100
Direct labor	3.6	11,000	39,600
Variable manufacturing overhead	1.4	11,000	15,400
Fixed manufacturing overhead	4.1	11,000	45,100
Total Product Cost			167,200
Note: product cost does not include selling expenses, sales commission and administrative expense