Question
In: Accounting
Martinez Company’s relevant range of production is 8,900 units to 13,900 units. When it produces and...
|
Martinez Company’s relevant range of production is 8,900 units to 13,900 units. When it produces and sells 11,400 units, its unit costs are as follows: |
|
Amount Per Unit |
|||
| Direct materials | $ | 6.70 | |
| Direct labor | $ | 4.20 | |
| Variable manufacturing overhead | $ | 1.40 | |
| Fixed manufacturing overhead | $ | 4.70 | |
| Fixed selling expense | $ | 3.70 | |
| Fixed administrative expense | $ | 2.10 | |
| Sales commissions | $ | 1.10 | |
| Variable administrative expense | $ | 0.55 | |
| 14-a. |
If 12,400 units are produced, what are the total amount of direct manufacturing costs incurred to support this level of production |
| 14-b. |
If 12,400 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 11,400 to 11,401 units? (Round your answer to 2 decimal places.) |
Solutions
Expert Solution
| On production of 11400units | On production of 12400units | ||
| Particulars | Amount per unit in $ | Amount per unit in $ | |
| Direct Materials | 6.7 | 6.7/11400*12400= $ 7.29 | |
| Direct Labour | 4.2 | 4.2/11400*12400= $4.57 | |
| Variable Manufacturing Overhead | 1.4 | 1.4/11400*12400= $1.52 | |
| Fixed Manufacturing Overhead | 4.7 | ||
| Fixed Selling expense | 3.7 | ||
| Fixed administrative expense | 2.1 | ||
| Sales commissions | 1.1 | ||
| Variable Administrative expense | 0.55 | ||
| 14. a) | If 12,400 units are produced, the total amount of direct manufacturing costs incurred to support this level of production will be | ||
| (Direct Material + Direct Labour) * No. of units | |||
| ($7.29 +$4.57 ) *12400 | $147064 | ||
| 14. b) | If 12,400 units are produced, the total amount of indirect manufacturing costs incurred to support this level of production will be | ||
| Fixed Manufacturing Overhead + (Variable Manufacturing Overhead* No. of units) | |||
| $4.7*11400 +$1.52*12400 | $72428 | ||
| 15 | Total incremental cost which Martinez will incur if it increases production from 11,400 to 11,401 units will be | ||
| Only manufacturing cost that are variable will be incurred additional cost as rest are either fixed or sales & administrative costs. | |||
| (Direct Material+ Direct Labour+ Variable Manufacturing Overhead) | |||
| $6.7+$4.2+$ 1.4 | $12.3 will be the incremental cost | ||
ekkarill92 answered 2 years agoRelated Solutions
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Fixed selling expense $ 2.40
Fixed administrative expense $ 2.10
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average costs per unit are as follows:
Average Cost per Unit
Direct
materials
$
6.70
Direct labor
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Variable manufacturing
overhead
$
1.40
Fixed manufacturing
overhead
$
4.00
Fixed selling expense
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3.70
Fixed administrative
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2.10
Sales commissions
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9. If 8,000 units are produced, what is the total amount of...
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and...
Martinez Company’s relevant range of production is 7,500 units
to 12,500 units. When it produces and sells 10,000 units, its
average costs per unit are as follows:
Average Cost Per Unit
Direct
materials
$
6.40
Direct labor
$
3.90
Variable manufacturing
overhead
$
1.40
Fixed manufacturing
overhead
$
4.00
Fixed selling expense
$
3.40
Fixed administrative
expense
$
2.10
Sales commissions
$
1.10
Variable administrative
expense
$
0.55
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Fixed selling expense
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to 12,500 units. When it produces and sells 10,000 units, its
average costs per unit are as follows:
Average Cost Per Unit
Direct
materials
$
5.60
Direct labor
$
3.10
Variable manufacturing
overhead
$
1.40
Fixed manufacturing
overhead
$
4.00
Fixed selling expense
$
2.60
Fixed administrative
expense
$
2.20
Sales commissions
$
1.20
Variable administrative
expense
$
0.45
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Direct materials
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6.60
Direct labor
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Variable manufacturing overhead
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Fixed manufacturing overhead
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Fixed selling expense
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