Martinez Company\'s relevant range of production is 9,900 units to 14,900 units.
ID: 2484263 • Letter: M
Question
Martinez Company's relevant range of production is 9,900 units to 14,900 units. When it produces and sells 12,400 units, its unit's cost are as follows Direct Materials: $6,80 Direct Labor: $4.30 Variable manufacturing overhead $1.60 Fixed manufacturing overhead: $4.80 Fixed selling expense $3.80 Fixed administrative expense: $2.20 Sales commission $1.20 Variable administrative expense $0.45 if 10,400 units are sold, what is the total amount of variable cost related to the unit? If 14,900 units are sold, what is the total amount of variable cost related to the unit sold? if 10,400 units are produced, what is the average fixed manufacturing cost per unit produced? If 14,900 units are produced, what is the average fixed manufacturing cost per unit produced? If 10, 400 Units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production If 14,900 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?Explanation / Answer
Solution:
1) Calculation of total variable cost (if 10,400 units are sold)
$ per unit
Amount
Direct Material
$6.80
$70,720
Direct Labor
$4.30
$44,720
Variable Manufacturing Overhead
$1.60
$16,640
Sales Commission
$1.20
$12,480
Variable Administrative expenses
$0.45
$4,680
Total Variable Cost
$149,240
2) Calculation of total variable cost (if 14,900 units are sold)
$ per unit
Amount
Direct Material
$6.80
$101,320
Direct Labor
$4.30
$64,070
Variable Manufacturing Overhead
$1.60
$23,840
Sales Commission
$1.20
$17,880
Variable Administrative expenses
$0.45
$6,705
Total Variable Cost
$213,815
3) Average fixed manufacturing cost per unit produced (if 10,400 Units are sold)
Average fixed manufacturing cost per unit = Total Fixed Manufacturing Cost / Produced Units
Total Fixed Manufacturing Cost = 12,400*4.80 = $59,520
Fixed cost will remain same from 9900 units to 14,900 units. In totality fixed cost will not change with the volume of production.
Produced Units = 10,400 Units
Average fixed manufacturing cost per unit = $59,520 / 10,400 Units = $5.723 Per Unit
4) Average fixed manufacturing cost per unit produced (if 14,900 Units are sold)
Average fixed manufacturing cost per unit = Total Fixed Manufacturing Cost / Produced Units
Total Fixed Manufacturing Cost = 12,400*4.80 = $59,520
Fixed cost will remain same from 9900 units to 14,900 units. In totality fixed cost will not change with the volume of production.
Produced Units = 14,900 Units
Average fixed manufacturing cost per unit = $59,520 / 14,900 Units = $3.995 Per Unit
$ per unit
Amount
Direct Material
$6.80
$70,720
Direct Labor
$4.30
$44,720
Variable Manufacturing Overhead
$1.60
$16,640
Sales Commission
$1.20
$12,480
Variable Administrative expenses
$0.45
$4,680
Total Variable Cost
$149,240
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