Question

Quiz Help Required information [The following information applies to the questions displayed below.) Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Cost per Unit $5.30 $2.80 $1.40 $4.00 $2.30 $2.20 $1.20 $0.45 3. Ir 8,000 units are produced and sold, what ls the varlable cost per unit produced and sold? (Round your answer to 2 declmal places.) Prev 3 4515 of 15! Next

Answer 1

Particulars	Average cost per unit ($)	10000 units	8000 units
Direct Material	5.3	53000	42400
Direct labour	2.8	28000	22400
Variable manufacturing overhead	1.4	14000	11200
Fixed manufacturing overhead	4	40000	40000
Fixed selling expense	2.3	23000	23000
Fixed administrative expense	2.2	22000	22000
Selling commission	1.2	12000	9600
Variable administrative expense	0.45	4500	3600
Total Variable cost for 8000 units			89200
Variable cost per unit (89200/8000)	11.15		11.15 $ per unit

Variable Costs are those with vary with the level of output. Thus, the level of activity has no significance in calculating the total variable cost per unit.