Question

[The following information applies to the questions displayed below.] 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 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed elling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost Per Unit $5.60 $3.10 $1.40 $4.00 $2.60 $2.20 $1.20 $0.45 8. If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced? (Round your answer to 2 decimal places.) Average fixed manufacturing cost per unit

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

8)

Since the production is within range provided (7,500 units to 12,500 units), Fixed costs of manufacturing will remain the same

Fixed manufacturing costs include Fixed manufacturing overhead but does not include Fixed selling expenses and Fixed administrative expenses

So, Total Fixed manufacturing overhead as per last production of 10,000 units

= Total quantity x Fixed manufacturing overhead per unit

= 10,000 x $4

= $ 40,000

So, Average fixed manufacturing cost at 12,500 units

= Total fixed manufacturing cost / Number of units

= $40,000 / 12,500

= $ 3.2 per unit