Question

Kubin compnay’s relevant range of production is

Kubin Company's relevant range of production is 21,000 to 25,000 units. When it produces and sells 23,000 units, its average costs per unit are as follows: Average Cost per Unit $ 3.10 $ 5.10 $ 2.60 $6.10 $4.60 $ 3.60 $ 2.10 $ 1.60 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense eBook Print References Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 23,000 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 23,000 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 25,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 21,000 units? (For all requirements, do not round intermediate calculations.) $ 503,700 273,700 $ 1. Total amount of product costs 2. Total amount of period costs incurred 3. Total amount of product costs 4. Total amount of period costs < Prev 2 of 4 If Next >

Answer 1

Ans:

1	Total amount of product costs	$503700
2	Total amount of period costs to be incurred	$273700
3	Total amount of product costs	$571300
4	Total amount of period costs for 21000 units	$273700

Here the product cost for producing 23000 units is $503700 and period cost for the same is $273700. As we know the period cost will not affect the units produced and it will remain same for the period. If we produce any amount of products in the same period the period cost will not change.

Total cost per unit = (total product cost + total period cost)/ number of units

There fore total cost per unit = (503700+273700)/23000

= $ 33.8 per unit

Hence for producing 25000 units, the production cost will be found as follows:

The total cost for 25000 units = 25000* $ 33.8 = $ 845000

The period cost for 25000 units will be same as $ 273700

Therefore Product cost =Total cost- period cost

= $ 845000- $ 273700

= $ 571300

The period cost for producing 21000 units will be same as $ 273700, since we believe that the period here will be the same.