Question

Kubin Company’s relevant range of production is 29,000 to 33,000 units. When it produces and sells 31,000 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.90
Direct labor	$	5.90
Variable manufacturing overhead	$	3.40
Fixed manufacturing overhead	$	6.90
Fixed selling expense	$	5.40
Fixed administrative expense	$	4.40
Sales commissions	$	2.90
Variable administrative expense	$	2.40

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 31,000 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 31,000 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 33,000 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 29,000 units?

Answer 1

Req 1.
Total Product cost of 31000 units:
Material		(31000*8.90)		275900
Labour		(31000*5.90)		182900
variable manufacturing OH		(31000*3.40)		105400
Fixed manufacturing Oh		(31000*6.90)		213900
Total Product cost of 31000 units:				778100
Req 2.
Total Period cost of 31000 uits:
Fixed selling expnse (31000*5.40)				167400
Fixed Admin expense (31000*4.40)				136400
Sales commission (31000*2.90)				89900
Variable Admin (31000*2.40)				74400
Total Period cost of 31000 units:				468100
Req 3.
Total Product cost of 33000 units:
Material		(33000*8.90)		293700
Labour		(33000*5.90)		194700
variable manufacturing OH		(33000*3.40)		112200
Fixed manufacturing Oh		(31000*6.90)		213900
Total Product cost of 33000 units:				814500
Req 4.
Total Period cost of 29000 uits:
Fixed selling expnse (31000*5.40)				167400
Fixed Admin expense (31000*4.40)				136400
Sales commission (29000*2.90)				84100
Variable Admin (29000*2.40)				69600
Total Period cost of 29000 units:				457500