Question

Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows: Amount per Unit Direct Materials $5.50, Direct Labor $3.00, Variable manufacturing overhead $1.50, Fixed Manufacturing overhead $3.50, Fixed selling expense $2.50, Fixed administrative expense $2.00, Sales Commissions $1.00, and Variable administrative expense $0.50.

1.)For financial accounting purposes, what is the total amount of product cost incurred to make 10,000 units?

2.)For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units?

3.)If 8,000 units are sold, what is the variable cost per unit sold?

4.)If 12,500 units are sold, what is the variable cost per unit sold?

5.)If 8,000 units are sold, what is the total amount of variable costs related to the units sold?

6.)If 12, 500 units are sold, what is the total amount of variable costs related to the units sold?

7.)If 8,000 units are produced, what is the average fixed manufacturing cost per unit produced?

8.)If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced?

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

10.)If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

11.)If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

12.)If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

13.)If selling price is $22 per unit, what is the contribution margin per unit sold?

14.)If 11,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?

15.)What total incremental cost will Martinez incur if it increases production from 10,000 to 10, 001 units?

Answer 1

Solution:

Given data representing in a tabular form :

(1) : For financial accounting purposes, what is the total amount of product cost incurred to make 10,000 units?

(2) : For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units?

(3) : If 8,000 units are sold, what is the variable cost per unit sold?

(4) : If 12,500 units are sold, what is the variable cost per unit sold?

Variable cost remains the same whatever the units produced and sold

So,therefore variable cost per unit Sold is $11.5

(5) : If 8,000 units are sold, what is the total amount of variable costs related to the units sold?

Total variable cost for( 8,000 units) -

Formula: Variable cost per unit sold*No.of units

=$11.5*8,000

= $92,000

Therefore Amount of Total varible cost = $92,000 .

(6) : If 12, 500 units are sold, what is the total amount of variable costs related to the units sold?

Total variable cost for( 12,500units) -

Formula: Variable cost per unit sold*No.of units

=$11.5*12,500

= $1,43,750

Therefore Amount of Total varible cost = $1,43,750 .

(7): If 8,000 units are produced, what is the average fixed manufacturing cost per unit produced?

Fixed Manufcturig Overhaed = $10,000*3.5

= $35,000

For 8,000 units -

Formula:

= Fixed manufacturing overhead / No.of Units

= $35,000 / 8,000

= $4.375 per unit

Therefore Fixed Manufacturing cost per unit = $4.375 per unit .

(8) : If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced?

Formula:

= Fixed manufacturing overhead / No.of Units

= $35,000 / 12,500

= $2.87 per unit

Therefore Fixed Manufacturing cost per unit = $2.87 per unit .

(9) :If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

Fixeed Manufacturing cost = $10,000 units*3.5 per unit

=$35,000 .

(10) : If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

Fixeed Manufacturing cost = $10,000 units*3.5 per unit

  =$35,000 .

Fixed Manufacturing cost Would remains the same in total Irrespective of Whatever the units was produced.

(11) : If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Manufacturing Overhead per unit = $47,000 /8,000

= 5.875 per unit.

(12) : If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Manufacturing Overhead per unit = $53,750 / 12,500

= $4.30per unit .

(13) : If selling price is $22 per unit, what is the contribution margin per unit sold?

Contribution Margin per unit -

= Selling price - Variable cost per unit(from3)

= $22 - $11.5

= $10.5 per unit

Therefore Contribution Margin per unit = $10.5

(14) : If 11,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?

Computation of Total direct Manufacturing cost -

= No.of Units (Direct material+ Direct labor)

= 11,000 units(5.5+3)

= 11,000 * 8.5

= $93,500

Computation of Total Indirect Manufacturing cost -

Variable Manufacturing Overhead + Fixed manufacturing overhead

Variable Manufacturing Overhead = (11,000 units*1.5)

= $16,500

Fixed Manufacturing Overhead = $35,000

= Variable Manufacturing Overhead + Fixed manufacturing overhead = $16,500+$35,000

=$ 51,500 .

(15) : What total incremental cost will Martinez incur if it increases production from 10,000 to 10, 001 units?

Incremental cost per unit produced  

Formula :

Incremental cost per unit produced = Direct Material + Direct labor + Variable MAnufacturing overhead

= 5.5 + 3 + 1.5

= 10

Incremental cost per produced = 10