Question

Thunderduck Shoes relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follow: Account Amount Per Unit Direct materials $6.00 Direct labor $3.50 Variable manufacturing overhead $1.50 Sales commissions $1.00 Variable administrative $0.50 Total Amount Fixed manufacturing overhead $40,000 Fixed selling expense $30,000 Fixed administrative expense $20,000 1. What is the total amount of product cost to make 8,000 units? Per unit? 2. What is the total amount of period cost to make 8,000 units? 3. If 12,500 units are sold, what is the variable cost per unit sold? 4. If 12,500 units are produced, what is the total amount of fixed manufacturing overhead cost incurred to support this level of production? IX Emalish lnited States Focus E-

Answer 1

calculation of production cost at 8000 units produced
particulars	rate	amount
material	$       6.00	$    48,000.00
labor	$       3.50	$    28,000.00
manufacturing overhead
fixed overhead		$    40,000.00
variable overhead	$       1.50	$    12,000.00
total production cost		$ 128,000.00
2
Calculation of period cost to make 8000 units
	rate	amount
total product cost		$ 128,000.00
add: adminstrative cost
variable cost	$       0.50	$      4,000.00
fixed cost		$    20,000.00
total period cost		$ 152,000.00
3
Calculation of variable cost per unit sold, if 12500 units are sold
	variable cost per unit
material	$       6.00
labor	$       3.50
manufacturing overhead	$       1.50
adminstrative cost	$       0.50
selling cost	$       1.00
variable cost per unit sold	$     12.50
4
If 12500 units are produced ,then the total fixed manufacturing overhead cost
incurred to support this level of production is $40000 ,because   from 7500 to 12500 units produced the fixed cost will be same at $40000.