Question

Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:

	Amount per Unit
Direct materials	$	7.00
Direct labor	$	4.00
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	5.00
Fixed selling expense	$	3.50
Fixed administrative expense	$	2.50
Sales commissions	$	1.00
Variable administrative expense	$	0.50

When the company sells 20,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representative?

Are Kubin's administrative expenses always going to be treated as indirect costs in its internal management reports?

Answer 1

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When the company sells 20,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representative?

The total indirect selling expense that cannot be traced to individual sales representatives is $50,000. The advertising expenditures cannot be traced to specific sales representatives.

Are Kubin's administrative expenses always going to be treated as indirect costs in its internal management reports?

The total indirect selling expense that cannot be traced to individual sales representatives is $50,000. The advertising expenditures cannot be traced to specific sales representatives.

Answer 2

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