Question

Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows:

Amount per Unit Direct materials $ 8.00 Direct labor $ 5.00 Variable manufacturing overhead $ 2.50 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 4.50 Fixed administrative expense $ 3.50 Sales commissions $ 2.00 Variable administrative expense $ 1.50 Required:

1. If 20,000 units are produced and sold, what is the variable cost per unit produced and sold?

2. If 23,000 units are produced and sold, what is the variable cost per unit produced and sold?

3. If 20,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

4. If 23,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

5. If 20,000 units are produced, what is the average fixed manufacturing cost per unit produced?

6. If 23,000 units are produced, what is the average fixed manufacturing cost per unit produced?

7. If 20,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

8. If 23,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

(Round per unit values to 2 decimal places.) for the answer.

Answer 1

Answer 1
If 20,000 units are produced and sold, the variable cost per unit produced and sold is
	Variable cost Per Unit
Direct materials	$8.00
Direct Labour	$5.00
Variable Manufacturing Overhead	$2.50
Sales Commission	$2.00
Variable administrative expense	$1.50
Variable cost per unit produced and sold	$19.00
Answer 2
If 23,000 units are produced and sold, the variable cost per unit produced and sold is
	Variable cost Per Unit
Direct materials	$8.00
Direct Labour	$5.00
Variable Manufacturing Overhead	$2.50
Sales Commission	$2.00
Variable administrative expense	$1.50
Variable cost per unit produced and sold	$19.00
Answer 3
If 20,000 units are produced and sold, the total amount of variable cost related to the units produced and sold
	Variable cost Per Unit	Total (20000 Units)
Direct materials	$8.00	$160,000.00
Direct Labour	$5.00	$100,000.00
Variable Manufacturing Overhead	$2.50	$50,000.00
Sales Commission	$2.00	$40,000.00
Variable administrative expense	$1.50	$30,000.00
Total amount of variable cost related to the units produced and sold		$380,000.00
Answer 4
If 23,000 units are produced and sold, the total amount of variable cost related to the units produced and sold
	Variable cost Per Unit	Total (23000 Units)
Direct materials	$8.00	$184,000.00
Direct Labour	$5.00	$115,000.00
Variable Manufacturing Overhead	$2.50	$57,500.00
Sales Commission	$2.00	$46,000.00
Variable administrative expense	$1.50	$34,500.00
Total amount of variable cost related to the units produced and sold		$437,000.00
Answer 5
If 20,000 units are produced, the average fixed manufacturing cost per unit produced = [21500 units * $4]/20000 units = $4.30 per unit
Answer 6
If 23,000 units are produced, the average fixed manufacturing cost per unit produced = [21500 units * $4]/23000 units = $3.74 per unit
Answer 7
If 20,000 units are produced, what is the total amount of fixed manufacturing overhead incurred = 21500 units * $4 = $86000
Answer 8
If 23,000 units are produced, what is the total amount of fixed manufacturing overhead incurred = 21500 units * $4 = $86000