Question

Kubin Company's relevant range of production is 29,000 to 33,000 units. When it produces and sells 31,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $ 8.90
Direct labor $5.90
Variable manufacturing overhead $3.40
Fixed manufacturing overhead $6.90
Fixed selling expense $5.40
Fixed administrative expense $4.40
Sales commissions $2.90
Variable administrative expense $2.40

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 31,000 units?
2. For financial accounting purposes, what is the total amount of period costs incurred to sell 31,000 units?
3. For financial accounting purposes, what is the total amount of product costs incurred to make 33,000 units?
4. For financial accounting purposes, what is the total amount of period costs incurred to sell 29,000 units?

Answer 1

Answer:

1.Product cost= 778100

2.Period cost = 393700

3. Product cost= 828300

4. Period cost= 368300

Explanation:

1. Total manufacturing cost per unit =

Direct material cost per unit + Direct labor cost per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit.

                  =  8.90 + 5.90 + 3.40 + 6.90

                 = 25.1 per unit.

Product cost = units produced * cost per unit = 31000 * 25.1 = 778100

2. Period cost= units sold * ( Fixed and variable selling and administrative expense per unit+sales commission per unit)

               = 31000 * ( 5.40+ 4.40 +2.90)

              = 31000 * 12.7

             =   393700.

3. Product cost = units produced * product cost per unit = 33000* 25.1=

828300.

4.Period cost = units sold * ( Fixed & variable selling and administrative cost per unit.

          =   29000 * 12.7

        =   368300