Question

Kubin Company’s relevant range of production is 13,000 to 18,000 units. When it produces and sells 15,500 units, its average costs per unit are as follows:Kubin Company’s relevant range of production is 13,000 to 18,000 units. When it produces and sells 15,500 units, its average costs per unit are as follows:

Cost per Unit $ 7.40 s 4.40 s 1.90 5.40 Direct labor Variable manufacturing overhead Fixed nanufacturing overhead 3.90 Fixed s 2.90 s 1.40 e.90 1. For financial accounting purposes, what is the total amount of product costs incurred to make 15,500 units? 2. For financial accounting purposes, what is the total amount of perlod costs incurred to sell 15,500 units? 3. For financial 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 13,000 units? accounting purposes, what is the total amount of product costs incurred to make 18.000 units?

Answer 1

1. Total Amount of Product Costs $296,050

2. Total Amount of Period Costs Incurred $141,050

3. Total Amount of Product Costs $330,300

4. Total Amount of Period Costs $135,300

Step-by-step explanation:

The computation is shown below:

1. For total product cost

Total Amount of Product Costs = Units × (Direct Material Per Unit + Direct Labor Per Unit + Variable Manufacturing Overhead + Fixed Manufacturing Overhead Per Unit)

= 15,500 units × ($7.40 + $4.40 + $1.90 + $5.40)

= $296,050

2. For total period cost

Total Amount of Period Costs = Units × (Fixed Selling Expense Per Unit + Fixed Administrative Expense Per Unit + Sales Commissions Per Unit + Variable Administrative Expense Per Unit)

= 15,500 units × ($3.90 + $2.90 + $1.40 + $.90)

= $141,050

3. For total amount of product cost incurred

Direct Material (18,000 units × $7.40) $133,200

Direct Labor (18,000 units × $4.40) $79,200

Variable Manufacturing Overhead (18,000 units × $1.90) $34,200

Fixed Manufacturing Overhead (15,500 units × $5.40) $83,700

Total Product Costs $330,300

4. For total amount of period cost incurred

Fixed Selling Expense (15,500 units × $3.90) $60,450

Fixed Administrative Expense (15,500 units × $2.90) $44,950

Sales Commissions (13,000 units × $1.40) $18,200

Variable Administrative Expense (13,000 units × $.90) $11,700

Total Period Costs $135,300

We simply applied the above formulas

and we know that the period cost includes the major portion of selling and admin expense while the product cost includes the direct labor, direct material, and the manufacturing overhead cost or we can say total manufacturing cost