Kubin Company’s relevant range of production is 16,000 to 24,500 units. When it
ID: 2390855 • Letter: K
Question
Kubin Company’s relevant range of production is 16,000 to 24,500 units. When it produces and sells 20,250 units, its average costs per unit are as follows:
If 16,000 units are produced, what is the average fixed manufacturing cost per unit produced?
6. If 24,500 units are produced, what is the average fixed manufacturing cost per unit produced?
7. If 16,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
8. If 24,500 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
(Round per unit values to 2 decimal places.)
Amount per Unit Direct materials $ 7.70 Direct labor $ 4.70 Variable manufacturing overhead $ 2.20 Fixed manufacturing overhead $ 5.70 Fixed selling expense $ 4.20 Fixed administrative expense $ 3.20 Sales commissions $ 1.70 Variable administrative expense $ 1.20Explanation / Answer
Answers
They remain same ‘per unit’ but changes in totality.
They change ‘per unit’ but remain same in totality.
Fixed cost will remains same for the level of units produced between 16,000 units to 24,500 units.
Working
Amount per Unit
Total cost at 20250 units level
[A = given]
[B = A x 20,250 units]
1
Direct materials
$ 7.70
$ 1,55,925.00
2
Direct labor
$ 4.70
$ 95,175.00
3
Variable manufacturing overhead
$ 2.20
$ 44,550.00
A = 1+2+3
Total variable manufacturing overhead
$ 14.60
$ 2,95,650.00
4
Sales commissions
$ 1.70
$ 34,425.00
5
Variable administrative expense
$ 1.20
$ 24,300.00
B = 4+5
Total Variable selling & administrative overhead
$ 2.90
$ 58,725.00
C = A+B
Total Variable Cost
$ 17.50
$ 3,54,375.00
D
Fixed manufacturing overhead
$ 5.70
$ 1,15,425.00
6
Fixed selling expense
$ 4.20
$ 85,050.00
7
Fixed administrative expense
$ 3.20
$ 64,800.00
E = 6+7
Total Fixed Selling & administrative expense
$ 7.40
$ 1,49,850.00
F = D+E
Total Fixed expense
$ 13.10
$ 2,65,275.00
Requirement no.
Units produced
Total Fixed manufacturing overhead
Average Fixed Manufacturing Overhead per unit produced [ Answers]
5
16000
$ 115,425.00
$ 7.21
6
24500
$ 115,425.00
$ 4.71
Total amount of fixed manufacturing overhead incurred to support 16,000 units level of production = $ 115,425.00
Total amount of fixed manufacturing overhead incurred to support 24,500 units level of production = $ 115,425.00
---Note—For both levels- 16000 units and 24500 units, Fixed manufacturing overhead will remain same (in totality) at $ 115,425.00
Working
Amount per Unit
Total cost at 20250 units level
[A = given]
[B = A x 20,250 units]
1
Direct materials
$ 7.70
$ 1,55,925.00
2
Direct labor
$ 4.70
$ 95,175.00
3
Variable manufacturing overhead
$ 2.20
$ 44,550.00
A = 1+2+3
Total variable manufacturing overhead
$ 14.60
$ 2,95,650.00
4
Sales commissions
$ 1.70
$ 34,425.00
5
Variable administrative expense
$ 1.20
$ 24,300.00
B = 4+5
Total Variable selling & administrative overhead
$ 2.90
$ 58,725.00
C = A+B
Total Variable Cost
$ 17.50
$ 3,54,375.00
D
Fixed manufacturing overhead
$ 5.70
$ 1,15,425.00
6
Fixed selling expense
$ 4.20
$ 85,050.00
7
Fixed administrative expense
$ 3.20
$ 64,800.00
E = 6+7
Total Fixed Selling & administrative expense
$ 7.40
$ 1,49,850.00
F = D+E
Total Fixed expense
$ 13.10
$ 2,65,275.00
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