Answer:
<u>2, 000 units </u>
a. $200
b. $214
c. $234.25
d. $383.25
e. $172
f. $176.25
g. $106
h. $85.75
<u>1, 250 units</u>
a. $200
b. $214
c. $246.40
d. $390
e. $172
f. $183
g. $106
h. $85.75
Explanation:
Psychological Testing Services:
a. Variable production costs: is an expense that changes in proportion to the number of units that are produced. These are all expenses incurred in the production process.
Variable production cost = the sum of all variable production costs
Labor for oversight and feedback = $165
Outsourced test analysis = $19
Materials used in testing = $7
Production overhead =$9
Variable production cost per unit =$165 + $19 + $7 + $9 + $14 = $200
b. Variable cost per unit: these are similar to variable production costs; however, these also include the variable costs that were not directly part of the production process, e.g. administrative expenses.
Variable cost per unit = $200 + $14 = $214
c. Full cost per unit: this is the sum of all costs that were incurred in the production of the goods. It includes both variable and fixed costs.
Full cost per unit = variable cost per unit + fixed cost per unit
(Fixed costs per unit = [$18, 000 + $22, 500]/2000 = $20.25)
= $214 + $20.25 = $234.25
d. Full absorption cost per unit: cost of the direct materials, direct labor, variable overhead, and fixed overhead.
$7 + $165 + $200 + [$22, 500 / 2, 000] = $383.25
e. Prime cost per unit: all costs that are directly attributable to the production of each product i.e. direct materials and direct labor
= $7 + $165 = $172
f. Conversion costs per unit: costs of converting raw materials into finished goods. Includes direct labor and production overheads
= $165 + [$22, 500 / 2, 000] = $176.25
g. Contribution margin per unit: this is the selling price per unit minus variable costs per unit. It shows the portion of sales that is not consumed by variable costs
= $320 - $214 = $106
h. Gross margin per unit: this is the selling price minus cost of goods sold.
= $320 - $234.25 = $85.75
For 1, 250 units
a. Variable production cost per unit =$165 + $19 + $7 + $9 + $14 = $200
b. Variable cost per unit = $200 + $14 = $214
c. Fixed costs per unit = [$18, 000 + $22, 500]/1, 250 = $32.40)
= $214 + $32.40 = $246.40
d. Full absorption cost per unit = $7 + $165 + $200 + [$22, 500 / 1, 250] = $390
e. Prime cost per unit = = $7 + $165 = $172
f. Conversion costs per unit = $165 + [$22, 500 / 1, 250] = $183
g. Contribution margin per unit = = $320 - $214 = $106
h. Gross margin per unit = = $320 - $234.25 = $85.75
