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| Martinez Company’s relevant range of production is 8,500 units to 13,500 units. When it produces and sells 11,000 units, its unit costs are as follows: |
| 1. | For financial accounting purposes, what is the total amount of product costs incurred to make 11,000 units?
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Amount Per Unit $5.70 $3.20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense $3.70 $2.70 $2.10 $1.10 $0.55
Expert Answer
Answer 1.
Total Cost per unit = Direct Materials per unit + Direct Labor per unit + Variable Manufacturing Overhead per unit + Fixed Manufacturing Overhead per unit
Total Cost per unit = $5.70 + $3.20 + $1.60 + $3.70
Total Cost per unit = $14.20
Number of units produced = 11,000
Total Product Cost = Total Cost per unit * Number of units produced
Total Product Cost = $14.20 * 11,000
Total Product Cost = $156,200
Answer 2.
Period Cost = Selling Expenses + Administrative Expense
Variable Expenses:
Sales Commission = $1.10
Variable Administrative Expense = $0.55
Total Variable Expenses per unit = $1.65
Fixed Expenses:
Fixed Selling Expense = $2.70
Fixed Administrative Expense = $2.10
Total Fixed Expense per unit = $4.80
Total Period Cost for 11,000 Units = ($1.65 + $4.80) * 11,000
Total Period Cost for 11,000 Units = $70,950
Answer 3.
Variable Cost per unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Sales Commission + Variable Administrative Expense
Variable Cost per unit = $5.70 + $3.20 + $1.60 + $1.10 + $0.55
Variable Cost per unit = $12.15
Answer 4.
Variable Cost per unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Sales Commission + Variable Administrative Expense
Variable Cost per unit = $5.70 + $3.20 + $1.60 + $1.10 + $0.55
Variable Cost per unit = $12.15
