Question

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:

    Average Cost Per Unit
Direct materials   $   6.10     
Direct labor   $   3.60     
Variable manufacturing overhead   $   1.40     
Fixed manufacturing overhead   $   4.00     
Fixed selling expense   $   3.10     
Fixed administrative expense   $   2.10     
Sales commissions   $   1.10     
Variable administrative expense   $   0.55

9. If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.)

12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.)

13. If the selling price is $23.00 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

14. If 12,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production? (Do not round intermediate calculations.)

15. What incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units? (Round your answer to 2 decimal places.)

Answer 1

9)	total Fixed manufacturing overhead cost
	5	*	8,000			=	40000	answer
10)	total Fixed manufacturing overhead cost
	3.2	*	12,500			=	40000	answer
11)	Total manufacturing overhead cpst
	VMOH		1.4	8,000	=	11200
	FMOH					40000
	Total manufacturing overhead cost					51200	answer
	total amount expressed on cost per unit basis					6.4	answer
12)	VMOH		1.4	12,500	=	17500
	FMOH					40000
	Total manufacturing overhead cost					57500	answer
	total amount expressed on cost per unit basis					4.6	answer
13)	Contribution margin per unit sold
	selling price per unit					23
	total variable cost per unit					12.75
	Contribution margin per unit sold					10.25	answer
14)	total amount of direct and indirect manufacturing costs
	Direct materials		6.1	12,000	=	73200
	Direct labor		3.6	12,000	=	43200
	VMOH		1.4	12,000	=	16800
	FMOH		4	12,000	=	48000
	Total amount of product cost					181200	answer
15)	incremental cost per unit product					11.1
	(Direct materials+direct labor+VMOH)

Answer 2

On #14, you wouldn't multiply FMOH by 12,000. It is fixed at 10,000 thus making indirect costs 56,800 for a total of 173,200.