1. 1 For financial accounting purposes, what is the total amount of product cost
ID: 399159 • Letter: 1
Question
1.
1 For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?
Direct materials.....................................................................
Direct labor...........................................................................
Variable manufacturing overhead........................................
Variable manufacturing cost per unit...................................
$11.00
Variable manufacturing cost per unit (a)..............................
Number of units produced (b)..............................................
Total variable manufacturing cost (a) × (b)...........................
Average fixed manufacturing overhead per unit (c).............
Number of units produced (d)..............................................
Total fixed manufacturing cost (c) × (d)................................
Total product (manufacturing) cost......................................
$150,000
Note: The average fixed manufacturing overhead cost per unit of $4.00 is valid for only one level of activity—10,000 units produced.
2.
For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units? $65,000
Sales commissions................................................................
Variable administrative expense..........................................
Variable selling and administrative per unit........................
$1.50
Variable selling and admin. per unit (a)...............................
$1.50
Number of units sold (b)......................................................
??
Total variable selling and admin. expense
(a) × (b)..........................................................................
???
Average fixed selling and administrative expense per unit ($3 fixed selling + $2 fixed admin.) (c)..............................
$5.00
Number of units sold (d)......................................................
10,000
Total fixed selling and administrative expense (c) × (d).......
?????
Total period (nonmanufacturing) cost.................................
$65,000
Note: The average fixed selling and administrative expense per unit of $5.00 is valid for only one level of activity—10,000 units sold.
1.
1 For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?
Direct materials.....................................................................
Direct labor...........................................................................
Variable manufacturing overhead........................................
Variable manufacturing cost per unit...................................
$11.00
Variable manufacturing cost per unit (a)..............................
Number of units produced (b)..............................................
Total variable manufacturing cost (a) × (b)...........................
Average fixed manufacturing overhead per unit (c).............
Number of units produced (d)..............................................
Total fixed manufacturing cost (c) × (d)................................
Total product (manufacturing) cost......................................
$150,000
C: UsersmurtuzatDropbox 0_consolidated teaching1001_teaching_2017100_fALL 2017 17_pre quiz & ICWA0_inclass exercises_17 ch 2 17_ch2_foundational_091217_p.docx Foundational Problem, Page 49, Chapter 2 (covers LEARNING OBJECTIVEs 2-1, 2-2, 2-3, 2-4, 2-6, 2-7] This is a reproduction of the foundational problem. Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows: Amount Per Unit $6.00 $3.50 $1.50 $4.00 $3.00 $2.00 $1.00 $0.50 Fixed manufacturing overhead . . . This exercise has 2 parts: Part 1 is WARM UP for Part 2, which requires you to answer questions asked. Warm-UP: To help you with the Warm up portion of the exercise, I am using 2 tables which rearranges the information the exercise provides in a slightly different form. Please study it! Table 1 classifies various items from the data given; the first column (A) gives item number; the last column (G) on right gives the total costs for 10,000 units. The 2nd column (B) shows if the item is direct or indirect; 3rd column shows variable or fixed; 4th (D) says whether it is product (pr) or (pe)or period cost. It then adds the numerical values of those itemsExplanation / Answer
Number of units sold: 10000
Total variable selling and admin. expenses: $1.5*10000 = $15000
Total fixed selling and admin. expenses: $5*10000 = $50000
Hence total non manufacturing costs = 15000+50000 = $65000
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