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:
1.
Fixed manufacturing overhead per unit when 19,500 units are produced = $5.90
Total Fixed manufacturing overheads = Fixed manufacturing overhead per unit x Number of units produced
= 19,500 x 5.90
= $115,050
Total Fixed manufacturing overheads will not increase when output is increased from 19,500 units to 20,000 units.
Direct materials (7.90 x 20,000) | 158,000 |
Direct labor (4.90 x 20,000) | 98,000 |
Variable manufacturing overheads (2.40 x 20,000) | 48,000 |
Fixed manufacturing overheads | 115,050 |
Total product costs | $419,050 |
2.
Fixed selling expense per unit when 19,500 units are produced = $4.40
Total selling expense = Fixed selling expense per unit x Number of units produced
= 19,500 x 4.40
= $85,800
Fixed administrative expense per unit when 19,500 units are produced = $3.40
Total administrative expense = Fixed administrative expense per unit x Number of units produced
= 19,500 x 3.40
= $66,300
Fixed administrative expenses and Fixed selling expenses will not decrease when output is decreased from 19,500 units to 19,000 units.
Fixed selling expenses | 85,800 |
Fixed administrative expenses | 66,300 |
Sales commissions (19,000 x 1.90) | 36,100 |
Variable administrative expenses (19,000 x 1.40) | 26,600 |
Total period costs | $214,800 |
Kubin Company’s relevant range of production is 19,000 to 20,000 units. When it produces and sells...
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 Unit Direct materials$7.90Direct labor$4.90Variable manufacturing overhead$2.40Fixed manufacturing overhead$5.90Fixed selling expense$4.40Fixed administrative expense $3.40Sales commissions$1.90Variable administrative expense$1.40Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 19,500 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 19,500 units? 3. For flinancial accounting purposes,...
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