Question

Kubin Company's relevant range of production is 27,000 to 29.000 units. When it produces and sells 28,000 units, its average costs per unit are as follows: Amount per Unit Direct materials Direct labor Variable manufacturing $ 8.70 $ 5.70 3.20 overhead Fixed manufacturing verhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative $ 6.70 5.20 $ 4.20 2.70 $ 2.20 expense Requlred: 1. If 27,000 units are produced and sold, what is the variable cost per unit produced and sold? 2 If 29.000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 27,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. If 29,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 5. If 27,000 units are produced, what is the average fixed manufacturing cost per unit produced? 6. If 29.000 units are produced, what is the average fixed manufacturing cost per unit produced? 7. If 27,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production? 8. If 29,000 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 decimel places.) 1. Varisble cost per unit 2 Variable cost per unit Total amount of variable cost 4. Total amount of variable oost 5 Average foced manufacturing oost per unit 0. Average fooed manufachuring cost per unt 7 Tatal amount of fored manufacturing overhead 18 Total amount of foxed manufacturing overhead

Answer 1

	Amount per unit
Direct materials	8.70
Direct labor	5.70
Variable manufacturing overhead	3.20
Sales commission	2.70
Variable administrative expense	2.20
Total variable cost per unit	22.50

Required 1 :
Variable cost per unit for 27000 units	22.50
Required 2 :
Variable cost per unit for 29000 units	22.50
Required 3 :
Total amount of variable cost = ( Variable cost per unit * Units ) = ( 22.50 * 27000 )	607500
Required 4 :
Total amount of variable cost = ( Variable cost per unit * Units ) = ( 22.50 * 29000 )	652500
Required 5 :
Total fixed manufacturing cost will be calculated from the given data and that will remain same for the company's relevant range of production i.e. from 27000 to 29000
Total fixed manufacturing cost = Fixed manufacturing overhead per unit * 28000 = 6.70 * 28000	187600
Average fixed manufacturing cost per unit = Total fixed manufacturing cost / Units = 187600 / 27000	6.95
Required 6:
Average fixed manufacturing cost per unit = Total fixed manufacturing cost / Units = 187600 / 29000	6.47
Required 7 :
Total amount of fixed manufacturing overhead	187600
As, 27000 units are within the relevant range of production, the total fixed manufacturing overhead will remain same
Required 8 :
Total amount of fixed manufacturing overhead	187600
As, 29000 units are within the relevant range of production, the total fixed manufacturing overhead will remain same