Question

Kubin Company’s relevant range of production is 11,000 to 14,000 units. When it produces and sells 12,500 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.20 Direct labor $ 4.20 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 5.20 Fixed selling expense $ 3.70 Fixed administrative expense $ 2.70 Sales commissions $ 1.20 Variable administrative expense $ 0.70 Required: 1. Assume the cost object is units of production: a. What is the total direct manufacturing cost incurred to make 12,500 units? b. What is the total indirect ma

Answer 1

Answer:

a. $142,500

b. $86,250

Explanation:

a. The computation of the total direct manufacturing cost is shown below:

= (Direct material per unit + direct labor per unit)  × number of units manufactured

= ($7.20 + $4.20) × 12,500 units

=  $142,500

b. The computation of the total indirect manufacturing cost is shown below:

= (Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit)  × number of units manufactured

= ($1.70 + $5.20) × 12,500 units

=  $86,250