Question

16) Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:

		Average Cost per Unit
	Direct materials	$5.30
	Direct labor	$3.65
	Variable manufacturing overhead	$1.50
	Fixed manufacturing overhead	$3.90
	Fixed selling expense	$0.75
	Fixed administrative expense	$0.60
	Sales commissions	$0.50
	Variable administrative expense	$0.50

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,000 units?

c. If 6,000 units are sold, what is the variable cost per unit sold?

d. If 6,000 units are sold, what is the total amount of variable costs related to the units sold?

e. If 6,000 units are produced, what is the average fixed manufacturing cost per unit produced?

f. If 6,000 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 6,000 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis?

h. If the selling price is $22.90 per unit, what is the contribution margin per unit sold?

i. If 4,000 units are produced, what is the total amount of direct manufacturing cost incurred?

j. If 4,000 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 5,000 to 5,001 units?

Answer 1

a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,000 units?
		Average Cost per Unit
	Direct materials	$5.30
	Direct labor	$3.65
	Variable manufacturing overhead	$1.50
	Fixed manufacturing overhead	$3.90
	Product cost per unit	$14.35
	Number of units produced	5000.00
	Total product cost	$71,750.00
b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,000 units?
		Amount per unit
	Fixed selling expenses	$0.75
	Fixed admin expenses	$0.60
	sales commission	$0.50
	variable admin expenses	$0.50
	period cost per unit	$2.35
	Number of units produced	5000.00
	Total period cost	$11,750.00
c. If 6,000 units are sold, what is the variable cost per unit sold?
		Average Cost per Unit
	Direct materials	$5.30
	Direct labor	$3.65
	Variable manufacturing overhead	$1.50
	sales commission	$0.50
	variable admin expenses	$0.50
	variable cost per unit sold	$11.45
d. If 6,000 units are sold, what is the total amount of variable costs related to the units sold?
	variable cost per unit sold	$11.45
	No.of units sold	6000
	Total amount of variable costs	$           68,700.00
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