Question

Exercise 1-8 Product Costs and Period Costs; Variable and Fixed Costs [LO1-3, LO1-4]

Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells 25,250 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.30
Direct labor	$	5.30
Variable manufacturing overhead	$	2.80
Fixed manufacturing overhead	$	6.30
Fixed selling expense	$	4.80
Fixed administrative expense	$	3.80
Sales commissions	$	2.30
Variable administrative expense	$	1.80

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,250 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 25,250 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 27,500 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 23,000 units?

(For all requirements, do not round intermediate calculations.)

Answer 1

1) Total amount of product cost

Direct material (25250*8.3)	209575
Direct labor (25250*5.3)	133825
Variable manufacturing overhead (25250*2.8)	70700
Fixed manufacturing overhead (25250*6.3)	159075
Total product cost	573175

2)Total period cost

Fixed selling expense (4.8*25250)	121200
Fixed administrative expense (3.8*25250)	95950
Sales commissions (2.3*25250)	58075
Variable administrative expense (1.8*25250)	45450
Total period Cost	320675

3) Total amount of product cost

Direct material (27500*8.3)	228250
Direct labor (27500*5.3)	145750
Variable manufacturing overhead (27500*2.8)	77000
Fixed manufacturing overhead (25250*6.3)	159075
Total product cost	610075

4)Total period cost

Fixed selling expense	121200
Fixed administrative expense	95950
Sales commissions (2.3*23000)	52900
Variable administrative expense (1.8*23000)	41400
Total period Cost	311450