Question

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Kubin Company's relevant range of production is 15,000 to 19,000 units. When it produces and sells 17,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $ 7.60 $ 4.60 $ 2.10 $ 5.60 $ 4.10 3.10 1.60 $ 1.10 DA GA GA GA GA Required: 1. Assume the cost object is units of production: a. What is the total direct manufacturing cost incurred to make 17,000 units? b. What is the total indirect manufacturing cost incurred to make 17,000 units? 2. Assume the cost object is the Manufacturing Department and that its total output is 17,000 units. a. How much total manufacturing cost is directly traceable to the Manufacturing Department? b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? 3. Assume the cost object is the company's various sales representatives. Furthermore, assume that the company spent $52,700 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives compensation. a. When the company sells 17,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b. When the company sells 17,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

Answer 1

А — в C D 1 1a) 2 3 4 particulars direct material direct labour per unit 6 7. 4.6 number of units produced amount 1 7000 129200 17000 78200 130900 5 direct manufacturing cost | 12.2 17000 207400|| 6 7 1b) 8 particulars per unit 17000 units 9 variable manufacturing cost 2.1 35700 10 fixed manufacturing overhead 5.6 95200 11 Total indirect manufacturing cost 12 13 2a) number of units 14 particulars per unit produced amount 15 direct material 6 7. 1 7000 129200 16 direct labour 4.6) 17000 78200 17 variable manufacturing cost 2.1 17000 35700 18 fixed manufacturing overhead 6 5. 1 7000 95200 19 Total manufacturing cost 19. 9 1 7000338300 20

21 2b) There are no indirect costs which are not traceable to the manufacturing 22 department 23 24 3a) number of units 25 particulars per unit produced amount 26 fixed selling expense per unit 4.1 17000 69700 27 Less : advertising expense 52700 28 Fixed portion of sales 17000 29 Add: sales commission 1.6 17000 27200 30 Total direct selling expenses 44200 31 32 3b) 33 The total indirect selling expenses that cannot be readily traced is $52700 34 35 36

B 1 1a) per unit ادو 2 3 4 particulars direct material direct labour number of units produced 17000 17000 7.6 4.6 amount =B3*C3 =B4*C4 17000 =B5*C5 5 direct manufacturing cost =B3+B4 6 7 1b) 8 particulars per unit 9 variable manufacturing cost 2.1 10 fixed manufacturing overhead 11 Total indirect manufacturing cost 12 13 2a) 17000 units =B9*17000 =B10*17000 =C9+C10 5.6 per unit 7.6 4.6 14 particulars 15 direct material 16 direct labour 17 variable manufacturing cost 18 fixed manufacturing overhead 19 Total manufacturing cost 20 number of units produced 17000 17000 17000 17000 17000 amount =B15*C15 =B16*C16 =B17*C17 =B18*C18 =B19*c19 2.1 5.6 =SUM(B15:B18)

21 2b) 22 There are no indirect costs which are not traceable to the manufacturing department 23 24 3a) number of units 25 particulars per unit produced amount 26 fixed selling expense per unit 4.1 17000 =B26*C26 27 Less : advertising expense 52700 28 Fixed portion of sales =D26-D27 29 Add: sales commission 1.6 17000 =B29*C29 30 Total direct selling expenses =D29+D28 31 32 3b) 33 The total indirect selling expenses that cannot be readily traced is $52700 34