Question

Rose Company has a relevant range of production between 10,000 and 25,000 units. The following cost data represents average cost per unit for 16,000 units of production.

	Average Cost per Unit
Direct Materials	$12
Direct Labor	9
Indirect Materials	2
Fixed manufacturing overhead	5
Variable manufacturing overhead	3
Fixed selling and administrative expenses	8
Variable sales commissions	25

Using the cost data from Rose Company, answer the following questions:

A. If 10,000 units are produced, what is the variable cost per unit?

Variable cost per unit $

B. If 17,000 units are produced, what is the variable cost per unit?

Variable cost per unit $

C. If 21,000 units are produced, what are the total variable costs?

Total variable costs $

D. If 12,000 units are produced, what are the total variable costs?

Total variable costs $

E. If 19,000 units are produced, what are the total manufacturing overhead costs incurred?

Total manufacturing overhead costs $

F. If 23,000 units are produced, what are the total manufacturing overhead costs incurred?

Total manufacturing overhead costs $

G. If 19,000 units are produced, what are the per unit manufacturing overhead costs incurred? If required, round final answer to two decimal places.

Manufacturing overhead costs per unit $

H. If 25,000 units are produced, what are the per unit manufacturing overhead costs incurred? If required, round final answer to two decimal places.

Manufacturing overhead costs per unit $

Answer 1

If 16,000 units are produced:

Variable manufacturing overhead per unit = Indirect materials + Variable manufacturing overhead
Variable manufacturing overhead per unit = $2 + $3
Variable manufacturing overhead per unit = $5

Variable cost per unit = Direct materials + Direct labor + Indirect materials + Variable manufacturing overhead + Variable sales commissions
Variable cost per unit = $12 + $9 + $2 + $3 + $25
Variable cost per unit = $51

Fixed manufacturing overhead = Fixed manufacturing overhead per unit * Units produced
Fixed manufacturing overhead = $5 * 16,000
Fixed manufacturing overhead = $80,000

Answer A.

Variable cost per unit = $51

Answer B.

Variable cost per unit = $51

Answer C.

If 21,000 units are produced:

Total variable costs = Variable cost per unit * Units produced
Total variable costs = $51 * 21,000
Total variable costs = $1,071,000

Answer D.

If 12,000 units are produced:

Total variable costs = Variable cost per unit * Units produced
Total variable costs = $51 * 12,000
Total variable costs = $612,000

Answer E.

If 19,000 units are produced:

Total manufacturing overhead = Variable manufacturing overhead per unit * Units produced + Fixed manufacturing overhead
Total manufacturing overhead = $5 * 19,000 + $80,000
Total manufacturing overhead = $175,000

Answer F.

If 23,000 units are produced:

Total manufacturing overhead = Variable manufacturing overhead per unit * Units produced + Fixed manufacturing overhead
Total manufacturing overhead = $5 * 23,000 + $80,000
Total manufacturing overhead = $195,000

Answer G.

If 19,000 units are produced:

Total manufacturing overhead = Variable manufacturing overhead per unit * Units produced + Fixed manufacturing overhead
Total manufacturing overhead = $5 * 19,000 + $80,000
Total manufacturing overhead = $175,000

Manufacturing overhead per unit = Total manufacturing overhead / Units produced
Manufacturing overhead per unit = $175,000 / 19,000
Manufacturing overhead per unit = $9.21

Answer H.

If 25,000 units are produced:

Total manufacturing overhead = Variable manufacturing overhead per unit * Units produced + Fixed manufacturing overhead
Total manufacturing overhead = $5 * 25,000 + $80,000
Total manufacturing overhead = $205,000

Manufacturing overhead per unit = Total manufacturing overhead / Units produced
Manufacturing overhead per unit = $205,000 / 25,000
Manufacturing overhead per unit = $8.20