Question

Required information The Foundational 15 (LO1-1, LO1-2, LO1-3, LO1-4, LO1-5, LO1-6] [The following information applies to the questions displayed below) Martinez Company's relevant range of production is 7,500 units to 12.500 units. When it produces and sells 10,000 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 comissions Variable administrative sense Average Cost per Unit $6.00 $3.50 $1.50 $4.80 $2.00 $1.00 $8.50 Foundational 1-11 11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.) Total manufacturing overhead cost Manufacturing overhead per unit

please explain step by step

Answer 1

11. Here the variable manufacturing cost per unit for 10000 units level is given as $ 1.50 per unit. Now variable costs on per unit basis remains constant but changes as total cost basis as the units increase the variable costs amount increases but per unit basis it remains the same.

However with respect to the fixed costs it's total amount remains constant but per unit amount keeps changing with the change in level of activity.

So, for 8000 units :

Variable costs = 8000 units × $ 1.50 = $ 12,000

Fixed costs ( at original level) = 10,000 units × $ 4 per unit = $ 40,000.

Thus total manufacturing overhead costs = variable + fixed

Total manufacturing overhead cost = $ 12,000 + $ 40,000. = $ 52,000

Manufacturing overhead per unit = Total manufacturing overhead costs / No. Of units produced.

Manufacturing overhead costs = $ 52,000 / 8000 = $ 6.50.

Thus

Total Manufacturing overhead costs	$ 52,000
Manufacturing overhead per unit	$ 6.50

12.

Here the units actually produced 12,500 units,

Variable cost = 12500 units × $ 1.5 = $ 18,750

Fixed costs ( as above ) = $ 40,000.

Total manufacturing overhead costs = $ 18,750 + $ 40,000

Total manufacturing overhead costs = $ 58,750

Manufacturing overhead per unit = Total manufacturing overhead / units produced.

Manufacturing overhead per unit = $ 58750 / 12,500

Manufacturer overhead per unit = $ 4.70

Thus

Total manufacturing overhead costs	$ 58,750
Manufacturing overhead per unit	$ 4.70