Question

In: Accounting

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

Refer to the data given in Exercise 1-7. Answer all questions independently.

 Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:

 

Required:

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

2. If 22,000 units are produced and sold, what is the variable cost per unit produced and sold?

3. If 18,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

4. If 22,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

5. If 18,000 units are produced, what is the average fixed manufacturing cost per unit produced?

6. If 22,000 units are produced, what is the average fixed manufacturing cost per unit produced?

7. If 18,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

8. If 22,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

Solutions

Expert Solution

1. Direct materials....................................... $ 7.00

Direct labor............................................. 4.00

Variable manufacturing overhead ............. 1.50

Sales commissions................................... 1.00

Variable administrative expense ............... 0.50

Variable cost per unit sold........................ $14.00

2. Direct materials....................................... $ 7.00

Direct labor............................................. 4.00

Variable manufacturing overhead ............. 1.50

Sales commissions................................... 1.00

Variable administrative expense ............... 0.50

Variable cost per unit sold........................ $14.00

3. Variable cost per unit sold (a) .................. $14.00

Number of units sold (b).......................... 18,000

Total variable costs (a) × (b).................... $252,000

4. Variable cost per unit sold (a) .................. $14.00

Number of units sold (b).......................... 22,000

Total variable costs (a) × (b).................... $308,000

(Note: The key to answering questions 5 through 8 is to calculate the total fixed manufacturing overhead costs as follows:)

Average fixed manufacturing overhead cost per unit (a)...................... $5.00 Number of units produced (b) ................................... 20,000

Total fixed manufacturing overhead (a) × (b)..................................... $100,000

(Note: The average fixed manufacturing overhead cost per unit of $5.00 is valid for only one level of activity—20,000 units produced.)

 (Understand that total fixed manufacturing overhead is $100,000)

Questions 5 through 8 are answered as follows: 

5. The average fixed manufacturing overhead per unit is:

 Total fixed manufacturing overhead (a)..... $100,000

Number of units produced (b).................. 18,000

Average fixed manufacturing cost per unit

produced (rounded) (a) ÷ (b)................ $5.56

6. The average fixed manufacturing overhead per unit is:

Total fixed manufacturing overhead (a)..... $100,000

Number of units produced (b).................. 22,000

Average fixed manufacturing cost per unit

produced (rounded) (a) ÷ (b)................ $4.55

7. The total fixed manufacturing overhead remains unchanged at $100,000.

8. The total fixed manufacturing overhead remains unchanged at $100,000. 

1. Variable cost per unit sold........................ $14.00

2. Variable cost per unit sold........................ $14.00

3. Total variable costs .................... $252,000

4. Variable cost per unit sold (a) .................. $14.00

Number of units sold (b).......................... 22,000

Total variable costs (a) × (b).................... $308,000

*Note: The key to answering questions 5 through 8 is to calculate the total fixed manufacturing overhead costs as follows:

Average fixed manufacturing overhead cost per unit (a)...................... $5.00 Number of units produced (b) ................................... 20,000

Total fixed manufacturing overhead (a) × (b)..................................... $100,000

(Note: The average fixed manufacturing overhead cost per unit of $5.00 is valid for only one level of activity—20,000 units produced.)

 (Understand that total fixed manufacturing overhead is $100,000)

Questions 5 through 8 are answered as follows: 

5. Average fixed manufacturing cost per unit................ $5.56

6. Average fixed manufacturing cost per unit................ $4.55

7. The total fixed manufacturing overhead remains unchanged at $100,000.

8. The total fixed manufacturing overhead remains unchanged at $100,000. 

devender singh answered 2 years ago
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