Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it
ID: 2537599 • Letter: K
Question
Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows: Amount per Unit Direct materials $ 8.00 Direct labor $ 5.00 Variable manufacturing overhead $ 2.50 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 4.50 Fixed administrative expense $ 3.50 Sales commissions $ 2.00 Variable administrative expense $ 1.50 Required: 1. If 20,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 23,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 20,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. If 23,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 5. If 20,000 units are produced, what is the average fixed manufacturing cost per unit produced? 6. If 23,000 units are produced, what is the average fixed manufacturing cost per unit produced? 7. If 20,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production? 8. If 23,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production? (Round per unit values to 2 decimal places.) for the answer.
Explanation / Answer
Solution:
Solution 1:
Variable cost per unit produced and sold will remain the same irrespective of level of production.
Therefore variable cost per unit at 20000 units = $19 per unit
Solution 2:
Variable cost per unit produced and sold will remain the same irrespective of level of production.
Therefore variable cost per unit at 23000 units = $19 per unit
Solution 3:
Total amount of variable cost at 20000 units = 20000*$19 = $380,000
Solution 4:
Total amount of variable cost at 23000 units = 23000*$19 = $437,000
Solution 5:
At 20000 units, fixed manufacturing cost per unit = Fixed manufacturing overhead / Number of unit produced = $86000/20000 = $4.30 per unit
Solution 6:
At 23000 units, fixed manufacturing cost per unit = Fixed manufacturing overhead / Number of unit produced = $86000/23000 = $3.74 per unit
Solution 7:
Fixed manufacturing overhead will remain the same irrespective of level of production.
Therefore total amount of fixed manufacturing overhead at 20000 units = $86000
Solution 8:
Fixed manufacturing overhead will remain the same irrespective of level of production.
Therefore total amount of fixed manufacturing overhead at 23000 units = $86000
Computation of variable cost per unit (Production level 21500 unit) Particulars Per unit cost Direct material $8.00 Direct labor $5.00 Variable manufacturing overhead $2.50 Sales Commission $2.00 Varaible administrative Expenses $1.50 Total $19.00Related Questions
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