Kubin Company’s relevant range of production is 24,000 to 31,000 units. When it

Question

Kubin Company’s relevant range of production is 24,000 to 31,000 units. When it produces and sells 27,500 units, its average costs per unit are as follows:

  

Required:

1. If 24,000 units are produced and sold, what is the variable cost per unit produced and sold?

2. If 31,000 units are produced and sold, what is the variable cost per unit produced and sold?

Amount per Unit Direct materials $ 8.40 Direct labor $ 5.40 Variable manufacturing overhead $ 2.90 Fixed manufacturing overhead $ 7.10 Fixed selling expense $ 4.90 Fixed administrative expense $ 3.90 Sales commissions $ 2.40 Variable administrative expense $ 1.90

Explanation / Answer

1. If 24,000 units are produced and sold, what is the variable cost per unit produced and sold?

2. If 31,000 units are produced and sold, what is the variable cost per unit produced and sold?

Direct materials 8.40 Direct labour 5.40 Variable manufacturing overhead 2.90 Sales commissions 2.40 Variable administrative expense 1.90 Variable cost per unit 21.00

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