Question

Kubin Company’s relevant range of production is 12,000 to 16,000 units. When it produces and sells 14,000 units, its average costs per unit are as follows:

Direct materials $ 7.30

Direct labor $ 4.30

Variable manufacturing overhead $ 1.80

Fixed manufacturing overhead $ 5.30

Fixed selling expense $ 3.80

Fixed administrative expense $ 2.80

Sales commissions $ 1.30

Variable administrative expense $ 0.80

Required:

1. If 12,000 units are produced and sold, what is the variable cost per unit produced and sold?

2. If 16,000 units are produced and sold, what is the variable cost per unit produced and sold?

3. If 12,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

4. If 16,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

5. If 12,000 units are produced, what is the average fixed m

Answer 1

1. If 12,000 units are produced and sold, what is the variable cost per unit produced and sold?

• variable cost per unit = $7.30 + $4.30 + $1.80 + $1.30 + $0.80 = $15.50

2. If 16,000 units are produced and sold, what is the variable cost per unit produced and sold?

• variable cost per unit = $7.30 + $4.30 + $1.80 + $1.30 + $0.80 = $15.50

3. If 12,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

• $15.50 x 12,000 = $186,000

4. If 16,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?

• $15.50 x 16,000 = $248,000

5. If 12,000 units are produced, what is the average fixed m

• average fixed manufacturing cost = ($5.30 x 14,000) / 12,000 = $6.1833
• average fixed selling expense = ($3.80 x 14,000) / 12,000 = $4.4333
• average fixed administrative expense = ($2.80 x 14,000) / 12,000 = $3.2667
• total fixed expenses per unit = $13.8833