Question

Kubin Company's relevant range of production is 19,000 to 20,000 units. When it produces and sells 19.500 units, its average costs per unit are as follows: Average cost per Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense $ 7.90 $ 4.90 $ 2.40 $5.99 $ 4.40 5 3.40 $ 1.99 $ 1.40 Required: 1. Assume the cost object is units of production: a. What is the total direct manufacturing cost incurred to make 19,500 units? b. What is the total indirect manufacturing cost incurred to make 19,500 units? 2. Assume the cost object is the Manufacturing Department and that its total output is 19,500 units. a. How much total manufacturing cost is directly traceable to the Manufacturing Department? b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? 3. Assume the cost object is the company's various sales representatives. Furthermore, assume that the company spent $66,300 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives' compensation a. When the company sells 19.500 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b. When the company sells 19.500 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

Answer 1

1a.	Direct materials per unit	$7.90
	Direct labor per unit	$4.90
	Total Direct manufacturing cost per unit	$12.80
	Number of units sold	19500
	Total Direct manufacturing cost	$2,49,600
1b.	Variable manufacturing overhead per unit	$2.40
	Fixed manufacturing overhead per unit	$5.90
	Total Indirect manufacturing cost per unit	$8.30
	Number of units sold	19500
	Total indirect manufacturing cost	$1,61,850
2a.	Direct materials per unit	$7.90
	Direct labor per unit	$4.90
	Variable manufacturing overhead per unit	$2.40
	Fixed manufacturing overhead per unit	$5.90
	Total Manufacturing cost per unit	$21.10
	Number of units sold	19500
	Total direct costs	$4,11,450
2b.	Total Indirect Costs	$0.00
3a.	Sales commissions per unit	$1.90
	Number of units sold	19500
	Total sales commission	$37,050
	Fixed portion of sales representatives’ compensation [($4.40*19500) - $66300]	$19,500
	Total Direct selling expense	$56,550
3b.	Total Indirect selling expense (advertising expense)	66300