Question

1. Rose Company has a relevant range of production between 10,000 and 25,000 units. The following cost data represents average cost per unit for 15,000 units of production.

	Average Cost per Unit
Direct Materials	$13
Direct Labor	10
Indirect Materials	1
Fixed manufacturing overhead	5
Variable manufacturing overhead	2
Fixed selling and administrative expenses	8
Variable sales commissions	25

Using the cost data from Rose Company, answer the following questions:

A. If 10,000 units are produced, what is the variable cost per unit?

Variable cost per unit $

B. If 17,000 units are produced, what is the variable cost per unit?

Variable cost per unit $

C. If 21,000 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 20,000 units are produced, what are the total manufacturing overhead costs incurred?

Total manufacturing overhead costs $

F. If 24,000 units are produced, what are the total manufacturing overhead costs incurred?

Total manufacturing overhead costs $

G. If 20,000 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 & B)
Direct materials per unit	$13
Direct labor per unit	$10
Indirect materials per unit	$1
Variable manufacturing overhead per unit	$2
Variable sales commission per unit	$25
Variable cost per unit	$51
Variable cost per unit is always fixed even the production volume changes, hence, for both A & B, the variable cost per unit is $51.
C)
Total variable costs for 21,000 units (21,000 units * $51)	$1,071,000
D)
Total variable costs for 11,000 units (11,000 units * $51)	$561,000
E)
Variable manufacturing overheads (20,000 units * $2+$1)	$60,000
Add: Fixed manufacturing overheads (15,000 units * $5)	$75,000
Total manufacturing overheads	$135,000
F)
Variable manufacturing overheads (24,000 units * $2+$1)	$72,000
Add: Fixed manufacturing overheads (15,000 units * $5)	$75,000
Total manufacturing overheads	$147,000
G)
Total manufacturing overheads if 20,000 units are produced (as calculated in E)	$135,000
Per unit manufacturing overhead ($135,000/20,000 units)	$6.75
H)
Variable manufacturing overheads (25,000 units * $2+$1)	$75,000
Add: Fixed manufacturing overheads (15,000 units * $5)	$75,000
Total manufacturing overheads	$150,000
Per unit manufacturing overhead ($150,000/25,000 units)	$6.00