Question

VIVE (The following information applies to the questions displayed below.] Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 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 $ 7.00 $ 4.00 $ 1.50 $ 5.00 $ 3.50 $ 2.50 $ 1.00 $ 0.50 Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 20,000 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 20,000 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 22,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 18,000 units? 1. 2. 3. Total amount of product costs Total amount of period costs incurred Total amount of product costs Total amount of period costs 4.

Answer 1

1.Total amount of product costs	$350,000
2.Total amount of period costs	$150,000
3. Total amount of product costs	$375,000
4. Total amount of period costs	$147,000

working;

The following costs will be considered for product cost;

Direct material	$7.00
direct labor	4.00
variable manufacturing overhead	1.50
Total variable product cost	$12.50

Total product cost to manufacture 20,000 units =>($12.50*20,000 units) + fixed manufacturing cost ($5.00*20,000) =>$250,000 + 100,000

=>$350,000.

fixed manufacturing cost will be ($5.00*20,000=>$100,000 for any units produced.

Total product cost to make 22,000 units =>$12.50*22,000 units + $100,000 fixed manufacturing cost=>$375,000.

Period cost to sell 20,000:

fixed selling expense ($3.50*20,000)	70,000
fixed adminstrative expense ($2.50*20,000)	50,000
sales commission ($1.00*20,000)	20,000
variable administrative expense ($0.50*20,000)	10,000
Total amout of period costs incurred	$150,000

Period costs to sell 18,000 units.

fixed selling expense (will remain fixed as above)	70,000
fixed administrative expense ( will be fixed as above)	50,000
sales commission ($1.00*18,000)	18,000
variable administrative expense ($0.50*18,000)	9,000
Total amout of period cost	$147,000