Question

Kubin Company's relevant range of production is 26,000 to 35,500 units. When it produces and sells 30,750 units, its average costs per unit are as follows: Average Cost per Unit $ 8.60 $ 5.60 $ 3.10 $ 6.60 $ 5.10 $ 4.10 $ 2.60 $ 2.10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Required: 1. Assume the cost object is units of production: a. What is the total direct manufacturing cost incurred to make 30,750 units? b. What is the total indirect manufacturing cost incurred to make 30,750 units? 2. Assume the cost object is the Manufacturing Department and that its total output is 30,750 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 $126,075 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 30,750 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b. When the company sells 30,750 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

Answer 1

1a Answers Direct Material Cost Per Unit Direct Labor Cost per Unit Direct Manufacturing cost per Unit Number of Units Sold Total Direct Manufacturing Cost 8.60 5.60 14.20 30,750 436650 1b) Variable Manufacturing OH per Unit Fixed Manufacturing OH Per Unit Indirect Manufacturing Cost Per Unit Number of Units Sold Total Indirect Manufacturing Cost 3.10 6.60 9.70 30,750 298275 Direct Material Cost Per Unit Direct Labor Cost per Unit Variable Manufacturing OH per Unit Fixed Manufacturing OH Per Unit Total Manufacturing Cost per Unit Number of Units Sold Total Direct Cost Total indirect Cost 8.60 5.60 3.10 6.60 23.90 30,750 734925 2b

2.60 30,750 79950 Sales Commission per Unit Number of Uint Sold Total Sales Commission Fixed portion of Sales Compensation (5.10*30750)-126075 Total Direct Selling Expenses Total Indirect Selling Expenses 30750 110700 126075 3b)