Martinez Company’s relevant range of production is 9,500 units to 14,500 units.

Question

Martinez Company’s relevant range of production is 9,500 units to 14,500 units. When it produces and sells 12,000 units, its unit costs are as follows:

If 14,500 units are produced, what is the average fixed manufacturing cost per unit produced? (Round your answer to 2 decimal places.)

Amount
Per Unit   Direct materials $ 6.20   Direct labor $ 3.70   Variable manufacturing overhead $ 1.60   Fixed manufacturing overhead $ 4.20   Fixed selling expense $ 3.20   Fixed administrative expense $ 2.20   Sales commissions $ 1.20   Variable administrative expense $ 0.45

Explanation / Answer

Answer: Average fixed manufacturing overhead=($4.20*12000)/14500 units=$3.475

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