Question

TB Problem Qu. 1-288 Balerio Corporation's relevant ...Balerio Corporation's relevant range of activity is 8,000 units to 11,000 units. When it produces and sells 10,000 units, its average costs per unit are as follows:Average Cost per UnitDirect materials $ 6.40Direct labor $ 3.20Variable manufacturing overhead $ 1.50Fixed manufacturing overhead $ 14.40Fixed selling expense $ 2.80Fixed administrative expense $ 2.00Sales commissions $ 0.80Variable administrative expense $ 0.70Required:a. For financial reporting purposes, what is the total amount of product costs incurred to make 10,000 units? (Do not round intermediate calculations.)b. If 9,000 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.)c. If 9,000 units are sold, what is the total amount of variable costs related to the units sold? (Do not round intermediate calculations.)d. If the selling price is $19.20 per unit, what is the contribution margin per unit sold? (Round "Per unit" answer to 2 decimal places.)e. What incremental manufacturing cost will the company incur if it increases production from 10,000 to 10,001 units? (Round "Per unit" answer to 2 decimal places.)

Answer 1

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The relevant range of activity is 8,000 units to 11,000 units.

When it produces and sells 10,000 units:

Direct materials $ 6.40

Direct labor $ 3.20

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 14.40

Fixed selling expense $ 2.80

Fixed administrative expense $ 2.00

Sales commissions $ 0.80

Variable administrative expense $ 0.70

A) product costs= Direct material + direct labor + manufacturing overhead

Product cost= (6.40*10000) + (3.20*10000) + (1.5*10000) + (14.40*10000)= $255000

B) Q= 9

Variable cost= direct material + direct labor + variable manufacturing overhead + variable sales comission + variable administrative expense

Variable cost= 6.40 + 3.20 + 1.5 + 0.80 + 0.70= $12.60

C) Total variable cost= 12.60*9000=$113400

D) Contribution margin= Price - unitary variable cost

CM= 19.20 - 12.60= $6.6

E) 10,001 units are still is the relevant range. Therefore the incremental costs are the variable cost.

If it sells 1 unit more, the manufacturing cost will increase in the proportion of direct material, direct labor and variable manufacturing overhead.

6.40+3.2+1.5= $11.1