Question

Learned Corporation has provided the following information:

Cost per Unit Cost per Period Direct materials $ 5.50

Direct labor $ 4.50

Variable manufacturing overhead $ 2.10

Fixed manufacturing overhead $ 25,800

Sales commissions $ 0.70

Variable administrative expense $ 0.60

Fixed selling and administrative expense $ 7,200

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units?

c. If the selling price is $24.30 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)

d. If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred? e. If 7,000 units are produced, what is the total amount of indirect manufacturing costs incurred?

Answer 1

a) For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units?

Ans:

Particulars	Price Per Unit	No of Units	Calculation	Total Amount
Direct Materials cost	$5.5	6000	6000*$5.50	$33,000
Direct labour cost	$4.50	6000	6000*$4.50	$27,000
Variable overheads	$2.10	6000	6000*$2.10	$12,600
Fixed overheads				$25,800
Product Cost				$98,400

b) For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units?

Ans:

Particulars	Price Per Unit	No of Units	Calculation	Total Amount
Sales Commission	$0.70	6000	6000*$.70	$4200
Variable Administrative expenses	$0.60	6000	6000*$.60	$3600
Fixed Selling and Administrative				$7200
Expenses
Period Cost				$15000

c) If the selling price is $24.30 per unit, what is the contribution margin per unit sold? (Round your answer to 2 decimal places.)

Ans:

Particulars	Amount	Amount
Selling Price(1)		$24.30
Variable cost(2)
Direct materials per unit	$5.50
Direct labour cost per Unit	$4.50
Variable Overheads	$2.10
Sales Commission	$0.70
Variable Administrative Expenses	$0.60	($13.40)
Contribution margin Per Unit		$10.90

d) If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred?

Ans:

Particulars	Per Unit Price	Units	Totals
Direct Materials	$5.50	7000	$38,500
Direct labour	$4.50	7000	$31,500
Direct Manufacturing Cost			$70,000

e) If 7,000 units are produced, what is the total amount of indirect manufacturing costs incurred?

Ans:

Particulars	Per Unit Price	Units	Totals
Variable Overheads	$2.10	7000	$14,700
Fixed Overheads			$25,800
Indirect Manufacturing Cost			$40,500