Question

Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 4,100 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	6.70
Direct labor	$	3.40
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	3.80
Fixed selling expense	$	0.70
Fixed administrative expense	$	0.55
Sales commissions	$	0.45
Variable administrative expense	$	0.45

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 4,100 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell 4,100 units?

c. If 5,100 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.)

d. If 5,100 units are sold, what is the total amount of variable costs related to the units sold?

e. If 5,100 units are produced, what is the average fixed manufacturing cost per unit produced? (Round "Per unit" answer to 2 decimal places.)

f. If 5,100 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 5,100 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis? (Round "Per unit" answer to 2 decimal places.)

h. If the selling price is $24.20 per unit, what is the contribution margin per unit sold? (Round "Per unit" answer to 2 decimal places.)

i. If 3,100 units are produced, what is the total amount of direct manufacturing cost incurred?

j. If 3,100 units are produced, what is the total amount of indirect manufacturing cost incurred?

k. What incremental manufacturing cost will the company incur if it increases production from 4,100 to 4,101 units? (Round "Per unit" answer to 2 decimal places.)

Answer 1

a	Total amount of product cost
	Direct materials		6.7	4,100	=	27470
	Direct labor		3.4	4,100	=	13940
	VMOH		1.5	4,100	=	6150
	FMOH		3.8	4,100	=	15580
	Total amount of product cost					63140	answer
b	Total amount of period cost
	Fixed selling expense		0.7	4,100	=	2870
	Fixed administrative exp		0.55	4,100	=	2255
	Sales commission		0.45	4,100	=	1845
	Variable adm expense		0.45	4,100	=	1845
	tota amount of period cost					8815	answer
c	Variable cost per unit					12.5	answer
d)	total amount of variable cost			5100	units =	63750	answer
e)	Average FMOH cost per unit produced
	3.8	*	4,100	/	5,100	=	3.05	answer
f)	total Fixed manufacturing overhead cost
	3.05	*	5,100			=	15580	answer
g)	Total manufacturing overhead cpst
	VMOH		1.5	5,100	=	7650
	FMOH					15580
a-	Total manufacturing overhead cost					23230	answer
b-	total amount expressed on cost per unit basis					4.55	answer
h)	Contribution margin per unit sold
	selling price per unit					24.2
	total variable cost per unit					12.5
	Contribution margin per unit sold					11.7	answer
i)	total amount of direct manufacturing cost incurred
	Direct materials		6.7	3,100	=	20770
	Direct labor		3.4	3,100	=	10540
	total amount of direct manufacturing cost incurred					31310	answer
j)	total amount of indirect manufacturing cost incurred
	VMO		1.5	3,100	=	4650
	FMOH					15580
	total amount of indirect manufacturing cost incurred					20230	answer
k)	incremental cost per unit product					11.6
	(Direct materials+direct labor+VMOH)