Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:
Average Cost Per Unit :
Direct materials $ 6.20
Direct labor $ 3.70
Variable manufacturing overhead $ 1.60
Fixed manufacturing overhead $ 4.00
Fixed selling expense $ 3.20
Fixed administrative expense $ 2.20
Sales commissions $ 1.20
Variable administrative expense $ 0.45
Required:
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?

1. The total amount to produce 10000 units is $155,000 ($15.5 * 10000 units ). The costs involved in calculating $15.50 includes Direct material of $6.20, Direct Labor $3.70, Variable manufacturing overhead $1.60, Fixed manufacturing overhead $4.00.

2. The cost incurred to sell 10,000 units is $70,500 ($7.05 * 10,000 units). $7.05 includes Fixed selling expense of $3.2/unit, Fixed administrative expense of $2.2, Sales commission of $1.2 and Variable administrative expense of $0.45.

3. The Variable cost per unit for 8000 units sold will be $13.15 this amount includes Direct material of $6.2, Direct labor of $3.7, Variable Manufacturing Overhead of $1.6, Sales Commission of $1.2, Variable administrative expense of $0.45.

4. The Variable cost per unit for 12,500 units sold will be $13.15 this amount includes Direct material of $6.2, Direct labor of $3.7, Variable Manufacturing Overhead of $1.6, Sales Commission of $1.2, Variable administrative expense of $0.45.

5. The total Variable cost for 8000 units is $105,200 ($13.15 * 8000 units)

6. The total Variable cost for 12,500 units is $16,4375 ($13.15 * 12,500 units)

7. Fixed Manufacturing cost per unit for 8000 units produced is $5 ($4 * 10,000 units / 8000 units)

8. Fixed Manufacturing cost per unit for 12,500 units produced is $3.2 ($4 * 10,000 units / 12,500 units)

anthougo anthougo · Answer 2 · 2022-01-27T13:00:17+01:00

1. For financial accounting purposes, the total amount of product cost incurred to produce 10,000 units is $155,000 ($40,000 + $11.50 x 10,000).

2. For financial accounting purposes, the total amount of period costs incurred to sell 10,000 units is $70,500 ($54,000 + $1.65 x 10,000).

3. If 8,000 units are sold, the variable cost per unit sold is $13.15 ($11.50 + $1.65).

4. If 12,500 units are sold, the variable cost per unit sold is $13.15.

5. If 8,000 units are sold, the total amount of the variable costs for the units sold is $105,200 (8,000 x$13.15).

6. If 12,500 units are sold, the total amount of the variable costs for the units sold is $164,375 (12,500 x$13.15).

7. If 8,000 units are produced, the average fixed manufacturing cost per unit produced is $5.00 ($40,000/8,000).

8. If 12,500 units are produced, the average fixed manufacturing cost per unit produced is $3.20 ($40,000/12,500).

Data and Calculations:

Relevant Production Range =7,500 to 12,500

Current production and sales = 10,000

Average cost per unit:

Unit Cost Total Costs

Direct materials $ 6.20

Direct labor $ 3.70

Variable manufacturing overhead $ 1.60

Total variable manufacturing costs = $11.50

Fixed manufacturing overhead $ 4.00 $40,000

Total manufacturing costs per unit = $15.50

Fixed selling expense $ 3.20 $32,000

Fixed administrative expense $ 2.20 $22,000

Total fixed selling and admin. costs = $54,000

Variable selling and admin. costs:

Sales commissions $ 1.20

Variable administrative expense $ 0.45

Variable selling/admin costs = $1.65

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