Kubin Company\'s relevant range of production is 13,000 to 18,000 units. When it

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: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $ 7.40 $ 4.40 1.90 $ 5.40 $ 3.90 $ 2.90 $ 1.40 s 0.90 Required 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 period costs incurred to sell 15,500 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 18,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 13,000 units? (For all requirements, do not round intermediate calculations.) $296,050 $141,050 1. Total amount of product costs 2. Total amount of period costs incurred 3. Total amount of product costs 4. Total amount of period costs

Explanation / Answer

3.total product cost to make 18,000 units:

note:fixed cost will not increase if the production raises to 18,000 units, i.e the total fixed cost will remain same as calculated at an average rate of $5.40 for 15,500 units =>$83,700 over the production range of 13,000 to 18,000 units.

remiaining product costs will vary with number of units.

4.period costs to sell 13,000 units:

note: fixed selling will remain at 3.90*15,500 =>$60,450, over the range of 13,000 to 18,000 units.

fixed administrative expense will remain at 2.90*15,500=>44,950 over the range of 13,000 to 18,000 units.

sales commissions and variable administrative expense will vary with the number of units sold.

Direct materials ($7.40*18,000) 133,200 directlabour (4.40*18,000) 79,200 variable manufacturing overhead (1.90*18,000) 34,200 fixed manufacturing overhead (5.40*15,500) (see note) 83,700 Total product cost incurred to make 15,500 units 330,300

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