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:

3. If 24,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

4. If 31,000 units are produced and sold, what is the total amount of variable cost related to the units 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

Req 3. Total Variable cost for 24000 units: Direct material (24000*8.40) 201600 Direct Labor (24000*5.40) 129600 Variable Manufacturing OH (24000*2.90) 69600 Sales commission (24000*2.40) 57600 Variable Admin expenses (24000*1.90) 45600 Total Variable cost of 24000 units 504000 Req 4. Total Variable cost for 31000 units: Direct material (31000*8.40) 260400 Direct Labor (31000*5.40) 167400 Variable Manufacturing OH (31000*2.90) 89900 Sales commission (31000*2.40) 74400 Variable Admin expenses (31000*1.90) 58900 Total Variable cost of 31000 units 651000

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