Question

Kubin Company's relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows: Average Cost per Unit 58.00 $ 5.00 $ 2.50 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales Commissions Variable administrative expense $6.00 $4.50 $ 3.50 $ 2.00 Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 21,500 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 21,500 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 23,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 20,000 units? (For all requirements, do not round Intermediate calculations.)

Answer 1

1 Total amount of product costs incured to make 21,500 Units 2 Total amount of Period costs incured to make 21,500 Units 3 Total amount of product costs incured to make 23,000 Units 4 Total amount of Period costs incured to make 20,000 Units | $ 462,250 S 247,250 S494,500 $230,000 Working Notes: Total Product Cost per unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + fixed Mnaufacturing Overhead = $8.00+$5.00+$2.50+$6.00 = $21.50 Total Period Cost = Fixed selling expenses+ Fixed administrative cost+sales commissions+Variable administrative expense = $4.50+$3.50+$2.00+$1.50 = $11.50 Product Cost for 21,500 Units = 21,500*$21.50 = $462,250 Period cost for 21,500 = 21,500*$11.50 = $247,250 Product Cost for 23,000 Units = 23,000*$21.50 = $494,500 Period cost for 20,000 = 20,000*$11.50 = $230,000