Martinez Company’s relevant range of production is 8,300 units to 13,300 units.

Question

Martinez Company’s relevant range of production is 8,300 units to 13,300 units. When it produces and sells 10,800 units, its unit costs are as follows:

Amount
Per Unit

  Direct materials

$

5.80

  Direct labor

$

3.30

  Variable manufacturing overhead

$

1.50

  Fixed manufacturing overhead

$

3.80

  Fixed selling expense

$

2.80

  Fixed administrative expense

$

2.00

  Sales commissions

$

1.00

  Variable administrative expense

$

0.50

7) If 8,800 units are produced, what is the average fixed manufacturing cost per unit produced? (Round your answer to 2 decimal places.)

Average fixed manufacturing cost per unit produced                   

8) If 13,300 units are produced, what is the average fixed manufacturing cost per unit produced?

Average fixed manufacturing cost per unit produced                  

9) If 8,800 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production? Total amount of fixed manufacturing costs             

10) If 13,300 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production? Total amount of fixed manufacturing costs             

13) If the selling price is $21.80 per unit, what is the contribution margin per unit sold?   Contribution margin per unit               

14a) If 11,800 units are produced, what are the total amount of direct manufacturing costs incurred to support this level of production? Total direct manufacturing costs                

14b) If 11,800 units are produced, what are the total amount of indirect manufacturing costs incurred to support this level of production? Total indirect manufacturing costs              

What total incremental cost will Martinez incur if it increases production from 10,800 to 10,801 units? Incremental cost per unit produced   

Martinez Company’s relevant range of production is 8,300 units to 13,300 units. When it produces and sells 10,800 units, its unit costs are as follows:

Explanation / Answer

7) If 8800 units are produced, the average fixed cost per unit = 10800 (3.80) / 8800 = $4.664 8. If 13300 units are produced, the average fixed manufacturing cost is (10800(3.80)/13300=$3.086 9. If 8800 units are produced, total fixed manufacturing cost is 8800 x $4.664 = $41043 10.If 13,300 units are produced, total fixed manufacturing cost remains the same at $41043 13) Contribution Margin Per Unit = Selling Price- Variable cost per Unit = $21.80- ($5.80+$3.30+$1.50+$1+$0.50) $9.70 Pe rUnit 14 a. Total direct manufacturing cost per unit = direct materials + direct labor = ($5.80 + $3.30 ) = $ 9.10 Therefore, If 11,800 units are produced, total direct manufacturing cost is 11,800 x 9.10 = $107380 14 b. Total Indirect manufacturing cost per = Total Variable Manufacturing Overhead + Total Fixed Manufacturing Overhead =($1.50*11800)+(10800*$3.80)=$58740

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