Question

Rose Company has a relevant range of production between 9,000 and 25,000 units. The following cost data represents average cost per unit for 14,000 units of production.

	Average Cost per Unit
Direct Materials	$13
Direct Labor	9
Indirect Materials	1
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 9,000 units are produced, what is the variable cost per unit?

Variable cost per unit $?

B. If 18,000 units are produced, what is the variable cost per unit?

Variable cost per unit $?

C. If 22,000 units are produced, what are the total variable costs?

Total variable costs $?

D. If 11,000 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

a)

Direct material	13
Direct labor	9
Variable manufacturing overhead	3
Variable sales commission	25
Total variable cost per unit	50

b)

Variable cost varies with output .It remains constant in per unit and varies in totality as number of units produced /sold varies .

Thus variable cost per unit will remain same = $ 50

c)Total variabe cost = Number of units *variable cost per unit

                  = 22000 * 50

                  = $ 1,100,000

d)Total variable cost = Number of units *variable cost per unit

               = 11000 * 50

              = $ 550,000

e)Fixed cost remains constant in totality and does not varies with output.Thus fixed manufacturing overhead = average fixed overhead cost per unit * estimated production

         = 5 *14000

          = 70000

variable overhead (3*19000)	57000
Fixed overhead	70000
Total manufacturing OH at 19000 units	127000