Martinez Company’s relevant range of production is 8,500 units to 13,500 units.

Question

Martinez Company’s relevant range of production is 8,500 units to 13,500 units. When it produces and sells 11,000 units, its unit costs are as follows:

13.If the selling price is $22.40 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)
Required:

If 12,000 units are produced, what are the total amounts of direct manufacturing costs incurred to support this level of production?

If 12,000 units are produced, what are the total amounts of indirect manufacturing costs incurred to support this level of production?

15. What total incremental cost will Martinez incur if it increases production from 11,000 to 11,001 units? (Round your answer to 2 decimal places.)

Amount
Per Unit   Direct materials $ 6.40   Direct labor $ 3.90   Variable manufacturing overhead $ 1.40   Fixed manufacturing overhead $ 4.40   Fixed selling expense $ 3.40   Fixed administrative expense $ 2.10   Sales commissions $ 1.10   Variable administrative expense $ 0.55

Explanation / Answer

13) Units produced            11,000 Selling price                 22.4 Direct materials 6.40   Direct labor 3.90   Variable manufacturing overhead 1.40 Direct cost per unit 11.70 contribution margin per unit 10.70 (22.4-11.7)   Fixed manufacturing overhead 4.40   Fixed selling expense 3.40   Fixed administrative expense 2.10   Sales commissions 1.10   Variable administrative expense 0.55 total indirect manufacturing cost per unit 11.55 14-a) Units produced            12,000 Direct cost per unit(from above calculation)              11.70 Total Direct manufacturing cost    140,400.00 14-b) indirect manufacturing cost: indirect manufacturing cost(from above cal.)              11.55 Total Indirect manufacturing cost          138,600 15) only variable cost per unit would increase when manufacturing overhead. As shown below extra units manufactured                       1 Direct cost per unit 11.70 variable administrative expenses                 0.55 Total incremental cost incurred              12.25

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