Kubin Company\'s relevant range of production is 18,000 to 22,000 units. When it
ID: 2516230 • Letter: K
Question
Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Direct paterials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Amount per Unit $7.00 4.00 1.50 5.00 3.50 $2.50 1.00 0.50 1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 22,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 18,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. If 22,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 5. If 18,000 units are produced, what is the average fixed manufacturing cost per unit produced? 6. If 22,000 units are produced, what is the average fixed manufacturing cost per unit produced? 7. If 18,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of pr 8. If 22,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?Explanation / Answer
Answer
Variable cost remains same ‘’per unit’’ but changes in totality with the change in units produced or sold.
Fixed Cost remains same in totality but changes ‘’per unit’’ with the change in units produced or sold.
Direct material
$7
Direct labor
$4
Variable manufacturing overhead
$1.5
Sales Commission
$1
Variable administrative expenses
$0.5
Total variable cost per unit
$14
per unit
Total for 20000 units base
Fixed manufacturing overhead
$5
$100,000
Fixed Selling expenses
$3.5
$70,000
Fixed administrative expense
$2.5
$50,000
Total
$11
$220,000
Question no.
Working/Explanation
Answers
1
[Working 1]
$14
2
[Working 1]
$14
3
[18000 units x $14]
$252,000
4
[22000 units x $14]
$308,000
5
[$100000/18000 units]
$5.56
6
[$100000/22000 units]
$4.54
7
[fixed remains fixed in total, no matter how many units]
$100,000
8
[fixed remains fixed in total, no matter how many units]
$100,000
Direct material
$7
Direct labor
$4
Variable manufacturing overhead
$1.5
Sales Commission
$1
Variable administrative expenses
$0.5
Total variable cost per unit
$14
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