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
