Exercise 1-7 Direct and Indirect Costs [LO1-1] Kubin Company’s relevant range of production is 10,000 to 12,000 units. When it produces and sells 11,000 units, its average costs per unit are as follows:
Solution 1:
Particulars | Amount | |
1a. | Direct materials per unit | $7.10 |
Direct labor per unit | $4.10 | |
Direct manufacturing cost per unit | $11.20 | |
Number of units sold | 11000 | |
Total direct manufacturing cost | $123,200.00 | |
1b. | Variable manufacturing overhead per unit | $1.60 |
Fixed manufacturing overhead per unit | $5.10 | |
Indirect manufacturing cost per unit | $6.70 | |
Number of units sold | 11000 | |
Total indirect manufacturing cost | $73,700.00 |
Solution 2:
Particulars | Amount | |
2a. | Direct materials per unit | $7.10 |
Direct labor per unit | $4.10 | |
Variable manufacturing overhead per unit | $1.60 | |
Fixed manufacturing overhead per unit | $5.10 | |
Total manufacturing cost per unit | $17.90 | |
Number of units sold | 11000 | |
Total Manufacturing cost traceble to manufacturing department | $196,900.00 | |
2b. | Total indirect costs | $0.00 |
Solution 3:
Particulars | Amount | |
3a. | Sales commissions per unit | $1.10 |
Number of units sold | 11000 | |
Total sales commission | $12,100.00 | |
Fixed portion of sales representatives’ compensation (11000*$3.60 - $28,600) | $11,000.00 | |
Total direct selling expense | $23,100.00 | |
3b. | The total indirect selling expense | $28,600.00 |
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