Question

Kubin Company’s relevant range of production is 27,000 to 29,000 units. When it produces and sells 28,000 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.70
Direct labor	$	5.70
Variable manufacturing overhead	$	3.20
Fixed manufacturing overhead	$	6.70
Fixed selling expense	$	5.20
Fixed administrative expense	$	4.20
Sales commissions	$	2.70
Variable administrative expense	$	2.20

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 28,000 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 28,000 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 29,000 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 27,000 units?

Answer 1

1. Total amount of product costs incurred to make 28,000 units

Product cost per unit

Particulars	$
Direct Materials per unit	8.70
Direct labor per unit	5.70
Variable manufacturing overhead per unit	3.20
Fixed manufacturing overhead per unit	6.70
Total Product cost per unit	24.30

Amount of product cost to make 28,000 units = 28,000 units * $24.30 per unit = $680,400

2. Total amount of period costs incurred to make 28,000 units

Period cost per unit

Particulars	$
Fixed selling expense perr unit	5.20
Fixed administrative expense per unit	4.20
Sales commission per unit	2.70
Variable administrative expense per unit	2.20
Total Period cost per unit	14.30

Amount of period cost to make 28,000 units = 28,000 units * $14.30 per unit = $400,400

3. Total amount of product costs incurred to make 29,000 units

Product cost per unit

Particulars	$
Direct Materials per unit	8.70
Direct labor per unit	5.70
Variable manufacturing overhead per unit	3.20
Fixed manufacturing overhead per unit	6.70
Total Product cost per unit	24.30

Amount of product cost to make 29,000 units = 29,000 units * $24.30 per unit = $704,700

4. Total amount of period costs incurred to make 27,000 units

Period cost per unit

Particulars	$
Fixed selling expense perr unit	5.20
Fixed administrative expense per unit	4.20
Sales commission per unit	2.70
Variable administrative expense per unit	2.20
Total Period cost per unit	14.30

Amount of period cost to make 27,000 units = 27,000 units * $14.30 per unit = $386,100

All the best...