Question

Paolucci Corporation's relevant range of activity is 8,100 units to 16,500 units. When it produces and sells 12,300 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	7.05
Direct labor	$	3.95
Variable manufacturing overhead	$	1.95
Fixed manufacturing overhead	$	3.40
Fixed selling expense	$	1.25
Fixed administrative expense	$	0.95
Sales commissions	$	1.20
Variable administrative expense	$	0.85

If 11,300 units are sold, the variable cost per unit sold is closest to:

Multiple Choice

• $20.60

• $12.95

• $16.35

• $15.00

Kesterson Corporation has provided the following information:

	Cost per Unit		Cost per Period
Direct materials	$	6.55
Direct labor	$	3.80
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead			$	25,500
Sales commissions	$	1.80
Variable administrative expense	$	0.50
Fixed selling and administrative expense			$	6,800

If 9,500 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Multiple Choice

• $14,250

• $44,500

• $39,750

• $25,500

Pedregon Corporation has provided the following information:

	Cost per Unit			Cost per Period
Direct materials	$	7.25
Direct labor	$	4.10
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead				$	20,900
Sales commissions	$	0.70
Variable administrative expense	$	0.80
Fixed selling and administrative expense				$	3,900

If the selling price is $21.90 per unit, the contribution margin per unit sold is closest to:

Multiple Choice

• $3.75

• $5.25

• $7.55

• $10.55

Answer 1

Answer of Part 1: The correct answer is $15.00

Variable Cost per Unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Sales Commissions + Variable Administrative Expense
Variable Cost per unit = $7.05 + $3.95 + $1.95 + $1.20 + $0.85
Variable Cost per unit = $15

Answer of Part 2: The correct answer is $39,750

Total Variable Manufacturing Overhead Cost = Variable Manufacturing Overhead per unit * No. of Units Produced
Total Variable Manufacturing Overhead Cost = $1.50 * 9,500
Total Variable Manufacturing Overhead Cost = $14,250

Total Indirect Manufacturing Cost = Variable Manufacturing Overhead + Fixed Manufacturing Overhead
Total Indirect Manufacturing Cost = $14,250 + $25,500
Total Indirect Manufacturing Cost = $39,750

Answer of Part 3: The correct answer is $7.55

Variable Cost per unit = Direct Material + Direct Labor + Variable Manufacturing Overhead + Sales Commission + Variable Administrative Expense
Variable Cost per unit = $7.25 + $4.10 + $1.50 + $0.70 + $0.80
Variable Cost per unit = $14.35

Contribution Margin per unit = Selling price per unit – Variable Cost per unit
Contribution Margin per unit = $21.90 - $14.35
Contribution Margin per unit = $7.55