Question

Martinez Company’s relevant range of production is 10,500 units to 15,500 units. When it produces and sells 13,000 units, its unit costs are as follows:

	Amount Per Unit
Direct materials	$	5.30
Direct labor	$	2.80
Variable manufacturing overhead	$	1.40
Fixed manufacturing overhead	$	3.30
Fixed selling expense	$	2.30
Fixed administrative expense	$	2.20
Sales commissions	$	1.20
Variable administrative expense	$	0.45

11a) If 11,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production?

11b) If 11,000 units are produced, what is the total amount of manufacturing overhead cost expressed on a per unit basis? (Round your answer to 2 decimal places.)

12a) If 15,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production?

12b) If 15,500 units are produced, what is the total amount of manufacturing overhead cost expressed on a per unit basis? (Round your answer to 2 decimal places.)

13) If the selling price is $21.30 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)

14a) If 11,000 units are produced, what are the total amount of direct manufacturing costs incurred to support this level of production?

14b) If 11,000 units are produced, what are the total amount of indirect manufacturing costs incurred to support this level of production?

15) What total incremental cost will Martinez incur if it increases production from 13,000 to 13,001 units? (Round your answer to 2 decimal places.)

Answer 1

Ans:

11a. Total manufacturing overhead= variable manufacturing overhead+ Fixed manufacturing overhead

                                                                                         = $1.40*11000+13000*3.30=$15400+$42900=$58300

                11b. Manufacturing overhead per unit= $58300/11000=$5.3 per unit

               12a. if 15500 units are produced:

                          Total manufacturing overhead= $1.40*15500+3.3*13000=$21700+$42900=$64600

                12b. Manufacturing overhead per unit=$64600/15500=$4.17

               13. if selling price is $21.30 per unit:

                        Contribution margin per unit= $21.30-$5.30-$2.80-$ 1.40-$1.20-$0.45=$10.15 per unit

             14a. if 11000 units produced

                     Direct manufacturing costs= 11000*(5.30+2.80+1.40)+$42900=$147400

           14b. indirect manufacturing costs= ($2.3+2.20)*13000+.45*11000=$58500+$4950=$63450