Question

3) Balerio Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: 20 POINTS Average Cost per Unit Direct materials $6.80 Direct labor $3.20 Variable manufacturing overhead $1.60 Fixed manufacturing overhead $13.50 Fixed selling expense $2.25 Fixed administrative expense $1.80 Sales commissions $0.50 Variable administrative expense $0.40 Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 9,000 units? b. If 10,000 units are sold, what is the variable cost per unit sold? c. If 10,000 units are sold, what is the total amount of variable costs related to the units sold? d. If the selling price is $18.20 per unit, what is the contribution margin per unit sold? e. What incremental manufacturing cost will the company incur if it increases production from 9,000 to 9,001 units?

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Balerio Corporation's relevant range of activity is 7,000 units to 11,000 units.

When it produces and sells 9,000 units, its average costs per unit are as follows:

Average Cost per Unit Direct materials $6.80

Direct labor $3.20

Variable manufacturing overhead $1.60

Fixed manufacturing overhead $13.50

Fixed selling expense $2.25

Fixed administrative expense $1.80

Sales commissions $0.50

Variable administrative expense $0.40

A) Total unitary costs= $30.05

Total cost= 9000*30.05= $270,450

B) Variable cost per unit= direct material + direct labor + variable MOH +variable administrative + sales commision

VCunit= 12.5

C) Total variable cost= $125,000

D) Contribution margin= selling price - unitary variable cost

CM= 18.2 - 12.5= $5.7

E) Incremental cost= unitar variable cost (only manufacturing)= 6.8 + 3.2 + 1.6= 11.6