Martinez Company’s relevant range of production is 7,900 units to 12,900 units.

Question

Martinez Company’s relevant range of production is 7,900 units to 12,900 units. When it produces and sells 10,400 units, its unit costs are as follows:

Amount
Per Unit

  Direct materials

$

6.60

  Direct labor

$

4.10

  Variable manufacturing overhead

$

1.50

  Fixed manufacturing overhead

$

4.60

  Fixed selling expense

$

3.60

  Fixed administrative expense

$

2.00

  Sales commissions

$

1.00

  Variable administrative expense

$

0.50

9.

   If 8,400 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

10.

   If 12,900 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

13.

   If the selling price is $22.60 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)

14-A. If 11,400 units are produced, what are the total amount of direct manufacturing costs incurred to

          support this level of production?

14-B. If 11,400 units are produced, what are the total amount of indirect manufacturing costs incurred to

          support this level of production?

15.

What total incremental cost will Martinez incur if it increases production from 10,400 to 10,401 units? (Round your answer to 2 decimal places.)

Martinez Company’s relevant range of production is 7,900 units to 12,900 units. When it produces and sells 10,400 units, its unit costs are as follows:

Explanation / Answer

Variable cost: Direct materials 6.6   Direct labor 4.1   Variable manufacturing overhead 1.5   Sales commissions 1   Variable administrative expense 0.5 Total VC 13.7 Fixed cost   Fixed manufacturing overhead 4.6   Fixed selling expense 3.6   Fixed administrative expense 2 Total Fixed cost 10.2 9) FC FC at 8400 units 85680 10) at 12900 units 131580 13) SP 22.6 VC 13.7 Cont per unit 8.9 14) Direct man cost: Direct materials 6.6   Direct labor 4.1   Variable manufacturing overhead 1.5   Fixed manufacturing overhead 4.6 total direct man cost per unit 16.8 units 11400 total direct man cost 191520 14b) Total cost per unit 23.9 Direct man cost 16.8 Indirect Man cost 7.1 units 11400 total direct man cost 80940 15) VC(incremental cost) 13.7

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