1) Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:
Average Cost per Unit |
||
Direct materials |
$5.30 |
|
Direct labor |
$3.65 |
|
Variable manufacturing overhead |
$1.50 |
|
Fixed manufacturing overhead |
$3.90 |
|
Fixed selling expense |
$0.75 |
|
Fixed administrative expense |
$0.60 |
|
Sales commissions |
$0.50 |
|
Variable administrative expense |
$0.50 |
Required:
e. If 6,000 units are produced, what is the average fixed manufacturing cost per unit produced?
f. If 6,000 units are produced, what is the total amount of fixed manufacturing cost incurred?
g. If 6,000 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis?
h. If the selling price is $22.90 per unit, what is the contribution margin per unit sold?
e) | |
Average fixed manufacturing cost per unit ($3.90 * 5,000 units = $19,500/6,000 units) | $3.25 |
f) | |
Total amount of fixed manufacturing cost incurred ($3.90 * 5,000 units) | $19,500 |
g) | |
Variable manufacturing overheads ($1.50 * 6,000 units) | $9,000 |
Add: Fixed manufacturing overheads | $19,500 |
Total manufacturing overheads | $28,500 |
Total manufacturing overhead cost per unit ($28,500/6,000 units) | $4.75 |
h) | |
Selling price per unit | $22.90 |
Less: Variable cost per unit: | |
Direct materials | ($5.30) |
Direct labor | ($3.65) |
Variable manufacturing overhead | ($1.50) |
Variable administrative expense | ($0.50) |
Contribution margin per unit | $11.95 |
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