Question

16 Saxbury Corporation's relevant range of activity is 3,000 unsts to 7000 unats. When it produces and sells 4200 unts, its average costs per unit are as follows Varlable manufacturing overhead Fixed selling expense rixed adsinistrative expense Variable odeinistrative expense Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 4300 units? b. For financial reporting purposes, what is the total amount of period costs incurred to sell 4,700 unts? c. It 5.700 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.) d # 5.700 units are sold, what is the total amount of vaniable costs related to the units sold? e If 5,700 units are produced, what is the average fixed manufacturing cost per unt produced? (Round "Per unit" answer to 2 decimal places.) f I 5,700 units are produced, what is the total amount of fixed manufacturing cost incurred? g If 5,700 units are produced, what is the total amount of manufacturing averhead cost incurred? What is this total amount expressed nn ,, nrr 'int hack? Round-per init'' nnswer to 2 decimal nlnces

Answer 1

Ans-a-Calculating total amount of product costs incurred to make 4,700 units:-

Particulars	Amount ($)
Direct Materials	6.10
Direct Labor	3.60
Variable Manufacturing Overhead	1.70
Fixed Manufacturing Overhead	3.90
Product cost per unit	$15.30
Number of units produced	4,700
Total product cost (4,700* $15.30)	$71,910

b- Calculating the amount of period costs incurred to sell 4,700 units :-

Particulars	Amount per unit ($)
Fixed selling expenses	0.75
Fixed administrative expenses	0.60
Sales commission	0.50
Variable administrative expenses	0.50
Period cost per unit	2.35
Number of units	4,700
Total Period Cost (4,700*$2.35)	$11,045

c-Variable cost per unit:-

Particulars	Amount ($)
Direct Materials	6.10
Direct Labor	3.60
Variable Manufacturing Overhead	1.70
Sales Commission	0.50
Variable Administrative Expenses	0.50
Variable Cost per unit sold	$12.40

d- Calculating the total amount of variable costs:-

Particulars	Amount ($)
Variable cost per unit	$12.40
Number of units sold	5,700
Total amount of variable costs	$70,680

e- If 5,700 units are produced, calculating the average fixed manufacturing cost per unit produced:-

Fixed manufacturing overhead	$3.90
Number of units	4,700
Total manufacturing fixed cost	$18,330
Units produced	5,700
Average fixed manufacturing cost per unit	$3.21

f- Total fixed cost is not affected by changes in the activity level within the relevant range. Therefore, total manufacturing fixed cost is $18,330.

g-Calculating total manufacturing costs per unit:-

Direct Material	$6.10
Direct Labor	$3.60
Variable Manufacturing Overhead	$1.70
Variable Manufacturing Costs	$11.40
Units Produced	5,700
Total Variable Manufacturing Costs	$64,980
Total Manufacturing Fixed Cost	$18,330
Total Manufacturing Costs	$83,310
Total Manufacturing costs per unit	$14.61 ($83,310/ 5,700)

h. If selling price per unit is $23.60 per unit, contribution margin per unit:-

Particulars	Amount ($)
Direct Material	6.10
Direct Labor	3.60
Variable Manufacturing Overhead	1.70
Sales Commission	0.50
Variable Administrative Expenses	0.50
Variable Cost per unit	$12.40
Selling Price	$23.60
Contribution margin per unit (Sales- Variable Cost )	$11.20

i- Calculating direct manufacturing cost per unit:-

Particulars	Amount per unit ($)
Direct Materials	6.10
Direct Labor	3.60
Total Direct Manufacturing Cost Per Unit	$9.70
Number of units produced	3,700
Total Direct manufacturing Cost (3,700*9.70)	$35,890

j- Calculating the indirect manufacturing cost:-

Particulars	Amount ($)
Variable Manufacturing Overhead	1.70
Fixed Manufacturing Overhead	3.90
Indirect Manufacturing Costs	$5.60
Units Produced	3,700
Variable Manufacturing Overhead (3,700*$1.70)	$6,290
Total Manufacturing Fixed Cost	$18,330
Total Indirect Manufacturing Costs	$24,620

k-

Particulars	Amount ($)	Amount ($)
Direct Material	$6.10	$6.10
Direct Labor	$3.60	$3.60
Variable Manufacturing Overhead	$1.70	$1.70
Variable Manufacturing Costs	$11.40	$11.40
Units Produced	4,700	4,701
Total Variable Manufacturing Costs	$53,580	$53,591.40
Total Manufacturing Fixed Costs	$18,330	$18,330
Total Manufacturing Costs	$71,910	$71,921.40
Total Manufacturing Costs per unit	$15.30 ($71,910/ 4,700)	$15.299 ($71,921.40/4,701)