Question

axbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,700 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	5.60
Direct labor	$	3.70
Variable manufacturing overhead	$	1.90
Fixed manufacturing overhead	$	3.80
Fixed selling expense	$	0.85
Fixed administrative expense	$	0.70
Sales commissions	$	0.60
Variable administrative expense	$	0.60

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,700 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,700 units?

c. If 6,700 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.)

d. If 6,700 units are sold, what is the total amount of variable costs related to the units sold?

e. If 6,700 units are produced, what is the average fixed manufacturing cost per unit produced? (Round "Per unit" answer to 2 decimal places.)

f. If 6,700 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 6,700 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis? (Round "Per unit" answer to 2 decimal places.)

h. If the selling price is $23.10 per unit, what is the contribution margin per unit sold? (Round "Per unit" answer to 2 decimal places.)

i. If 4,700 units are produced, what is the total amount of direct manufacturing cost incurred?

j. If 4,700 units are produced, what is the total amount of indirect manufacturing cost incurred?

k. What incremental manufacturing cost will the company incur if it increases production from 5,700 to 5,701 units? (Round "Per unit" answer to 2 decimal places.)

Garrison 17e Rechecks 2020-09-09

Next Visit question map

Question 1 of 14 Total1 of 14

Prev

Answer 1

a. Total amount of product cost:

1.Direct material (5,700*$5.60)	31,920
2.Direct labor (5,700*$3.70)	21,090
3.Variable manufacturing overhead (5,700*$1.90)	10,830
4.Fixed manufacturing overhead (5,700*$3.80)	21,660
Total product cost (1+2+3+4)	$85,500

b. Total amount of period cost:

1.Fixed selling expense (5,700*$0.85)	$4,845
2.Fixed administrative expense (5,700*$0.70)	3,990
3.Sales commission (5,700*$0.60)	3,420
4.Variable administrative expense (5,700*$0.60)	3,420
Total period costs (1+2+3+4)	$15,675

c. Variable cost per unit sold :

Direct material	$5.60
Direct labour	3.70
Variable manufacturing overhead	1.90
Sales commission	0.60
Variable administrative expense	0.60
Variable cost of unit sold	$12.4

d. Total amount of variable cost = 6,700*$12.4 = $83,080

e. Average fixed manufacturing cost per unit =5,700*$3.80 / 6,700 = $21,660 / 6,700 = $3.23

f. Total amount of fixed manufacturing cost incurred = $21,660

Note: (Fixed overhead doesn't change with units change)

g. Total amount of manufacturing overhead cost incurred = 6,700*$11.2 + 21,660 = $96,700

Total amount expressed on a per unit basis = $96,700/6,700 = $14.43 per unit

Note: (Variable manufacturing overhead=$5.60+3.70+1.90=$11.2)

h.

Selling price per unit	$23.10
Variable cost per unit	-12.40
Contribution margin per unit sold	$10.70

i. Total amount of direct manufacturing cost incurred :

1.Direct material (4,700*$5.60)	$26,320
2.Direct labor (4,700*$3.70)	17,390
3.Direct manufacturing cost (1+2)	$43,710

j. Total amount of indirect manufacturing cost incurred :

1.Variable manufacturing overhead (4,700*$1.90)	$8,930
2.Fixed manufacturing overhead	21,660
3.Indirect manufacturing cost (1+2)	$30,590

k. Incremental manufacturing costs( variable manufacturing cost per unit) = $5.60+3.70+1.90 = $11.2