Kubin Company’s relevant range of production is 29,000 to 33,000 units. When it

Question

Kubin Company’s relevant range of production is 29,000 to 33,000 units. When it produces and sells 31,000 units, its average costs per unit are as follows:

  

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 31,000 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 31,000 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 33,000 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 29,000 units?

Average Cost per Unit Direct materials $ 8.90 Direct labor $ 5.90 Variable manufacturing overhead $ 3.40 Fixed manufacturing overhead $ 6.90 Fixed selling expense $ 5.40 Fixed administrative expense $ 4.40 Sales commissions $ 2.90 Variable administrative expense $ 2.40

Explanation / Answer

Req 1. Total Product cost of 31000 units: Material (31000*8.90) 275900 Labour (31000*5.90) 182900 variable manufacturing OH (31000*3.40) 105400 Fixed manufacturing Oh (31000*6.90) 213900 Total Product cost of 31000 units: 778100 Req 2. Total Period cost of 31000 uits: Fixed selling expnse (31000*5.40) 167400 Fixed Admin expense (31000*4.40) 136400 Sales commission (31000*2.90) 89900 Variable Admin (31000*2.40) 74400 Total Period cost of 31000 units: 468100 Req 3. Total Product cost of 33000 units: Material (33000*8.90) 293700 Labour (33000*5.90) 194700 variable manufacturing OH (33000*3.40) 112200 Fixed manufacturing Oh (31000*6.90) 213900 Total Product cost of 33000 units: 814500 Req 4. Total Period cost of 29000 uits: Fixed selling expnse (31000*5.40) 167400 Fixed Admin expense (31000*4.40) 136400 Sales commission (29000*2.90) 84100 Variable Admin (29000*2.40) 69600 Total Period cost of 29000 units: 457500

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