Question

TB Problem Qu. 1-275 Saxbury Corporation's relevant range of activity Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,200 units, its average costs per unit are as follows: Average Cost per Unit 5.10 3.45 1.40 3.50 0.60 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense 0.45 Sales commissions 0.35 0.35 Variable administrative expense Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,200 units? b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,200 units? c. If 6,200 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.) d. If 6,200 units are sold, what is the total amount of variable costs related to the units sold? e. If 6,200 units are produced, what is the average fixed manufacturing cost per unit produced? (Round "Per unit" answer to 2 decimal places.) f. If 6,200 units are produced, what is the total amount of fixed manufacturing cost incurred? g. If 6,200 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis? (Round "Per unit" answer to 2 decimal places.) h. If the selling price is $22.60 per unit, what is the contribution margin per unit sold? (Round "Per unit" answer to 2 decimal places.) i. If 4,200 units are produced, what is the total amount of direct manufacturing cost incurred? j. If 4,200 units are produced, what is the total amount of indirect manufacturing cost incurred? k. What incremental manufacturing cost will the company incur if it increases production from 5,200 to 5,201 units? (Round "Per unit" answer to 2 decimal places.)

Answer 1

Answer A)

Product Cost Incurred for Making 5200 units
	Per Unit Cost	Total
Direct Material	5.1	26,520
Direct Labour	3.45	17,940
Variable Mfg. Overhead	1.4	7,280
Fixed Mfg. Overhead	3.5	18,200
Total		69,940

Answer B)

Product Cost Incurred for Making 5200 units
Fixed Selling Expense	0.60	3,120
Fixed Admin. Expense	0.45	2,340
Sales Commission	0.35	1,820
Variable Admin. Expense	0.35	1,820
Total		9,100

Answer C & D)

Calculation of Total Variable Cost:
Direct Material	26,520
Direct Labour	17,940
Variable Mfg. Overhead	7,280
Sales Commission	1,820
Variable Admin. Expense	1,820
Total Variable Cost	55,380
Number of Units Sold	6,200
Variable Cost per unit ($)	8.93

Answer E)

Total Fixed Manufacturing Cost	18200
Number of Units Produced	6200
Fixed Manufacturing Cost per unit	2.94

Answer F)

Total Fixed Manufacturing Cost

18200

This amount does not change with the change in level of production

Answer G)

Variable Manufacturing Cost (1.40*6200)	8680
Fixed Manufacturing Cost	18200
Total Manufacturing Overhead	26880
Per unit Mfg Overhead Cost ($)	4.34

Answer H)

Selling Price (A)	22.6
Variable Costs:
Direct Material	5.1
Direct Labour	3.45
Variable Mfg. Overhead	1.4
Sales Commission	0.35
Variable Admin. Expense	0.35
Total Variable Cost (B)	10.65
Contibution Margin (A)- (B)	11.95

Answer I)

Direct Manufacturing cost if 4200 units are produced
	Per Unit Cost	Total
Direct Material	5.10	21,420
Direct Labour	3.45	14,490
Total Direct Mfg. Cost incurred		35,910

Answer J)

Indirect Manufacturing cost if 4200 units are produced
Variable Mfg. Overhead	1.4	5880
Fixed Mfg. Overhead (remains Unchanged)		18200
Total Indirect Mfg. Cost incurred		24080

Answer K)

Incremental Mfg. Cost
Direct Material	5.10
Direct Labour	3.45
Variable Mfg. Overhead	1.40
Total Incremental mfg cost per Unit	9.95