3. If 8,000 units are sold, what is the variable cost per unit sold? $12.50 Dire
ID: 399160 • Letter: 3
Question
3.
If 8,000 units are sold, what is the variable cost per unit sold? $12.50
Direct materials.....................................................................
Direct labor............................................................................
Variable manufacturing overhead.........................................
Sales commissions.................................................................
Variable administrative expense...........................................
Variable cost per unit sold.....................................................
$12.50
4.
If 12,500 units are sold, what is the variable cost per unit sold? Same as # 3; $12.50. Per unit does not changes.
Why does the per unit variable will be not change?
5.
If 8,000 units are sold, what is the total amount of variable costs related to the units sold? $100,000
Variable cost per unit sold (a)...............................................
$12.50
Number of units sold (b).......................................................
8,000
Total variable costs (a) × (b)..................................................
$100,000
6.
If 12,500 units are sold, what is the total amount of variable costs related to the units sold? $156,250
See computation below
Variable cost per unit sold (a)...............................................
$12.50
Number of units sold (b).......................................................
12,500
Total variable costs (a) × (b)..................................................
$156,250
7.
For #7 & 8, please find average cost per unit. In # 7 the units produced are 8,000 while in #8 they are 12,500.
Total fixed manufacturing cost
(see requirement 1) (a)......................................................
$40,000
Number of units produced (b)..............................................
8,000
Average fixed manufacturing cost per unit produced (a) ÷ (b).......................................................................................
?
3.
If 8,000 units are sold, what is the variable cost per unit sold? $12.50
Direct materials.....................................................................
Direct labor............................................................................
Variable manufacturing overhead.........................................
Sales commissions.................................................................
Variable administrative expense...........................................
Variable cost per unit sold.....................................................
$12.50
4.
If 12,500 units are sold, what is the variable cost per unit sold? Same as # 3; $12.50. Per unit does not changes.
Why does the per unit variable will be not change?
5.
If 8,000 units are sold, what is the total amount of variable costs related to the units sold? $100,000
Variable cost per unit sold (a)...............................................
$12.50
Number of units sold (b).......................................................
8,000
Total variable costs (a) × (b)..................................................
$100,000
6.
If 12,500 units are sold, what is the total amount of variable costs related to the units sold? $156,250
See computation below
Variable cost per unit sold (a)...............................................
$12.50
Number of units sold (b).......................................................
12,500
Total variable costs (a) × (b)..................................................
$156,250
7.
For #7 & 8, please find average cost per unit. In # 7 the units produced are 8,000 while in #8 they are 12,500.
Total fixed manufacturing cost
(see requirement 1) (a)......................................................
$40,000
Number of units produced (b)..............................................
8,000
Average fixed manufacturing cost per unit produced (a) ÷ (b).......................................................................................
?
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
Variable cost per unit does not change because variable cost is soleley related to the production of the product and has nothing to do with the fixed cost like machinery, land, etc.Variable cost changes in proportion with the change in number of units being produced.
The average fixed manufacturing cost = Total fixed cost/No. of units produced = 40000/8000 = $5 per unit
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