The following information applies to the questions displayed below.] Kubin Company’s relevant range of production is 28,000 to 31,500 units. When it produces and sells 29,750 units, its average costs per unit are as follows: Average Cost per UnitDirect materials $ 8.80Direct labor $ 5.80Variable manufacturing overhead $ 3.30Fixed manufacturing overhead $ 6.80Fixed selling expense $ 5.30Fixed administrative expense $ 4.30Sales commissions $ 2.80Variable administrative expense $ 2.30Required:1. For financial accounting purposes, what is the total amount of product costs incurred to make 29,750 units?2. For financial accounting purposes, what is the total amount of period costs incurred to sell 29,750 units?3. For financial accounting purposes, what is the total amount of product costs incurred to make 31,500 units?4. For financial accounting purposes, what is the total amount of period costs incurred to sell 28,000 units? (For all requirements, do not round intermediate calculations.)
Question
The following information applies to the questions displayed below.] Kubin Company’s relevant range of production is 28,000 to 31,500 units. When it produces and sells 29,750 units, its average costs per unit are as follows: Average Cost per UnitDirect materials 5.80Variable manufacturing overhead 6.80Fixed selling expense 4.30Sales commissions 2.30Required:1. For financial accounting purposes, what is the total amount of product costs incurred to make 29,750 units?2. For financial accounting purposes, what is the total amount of period costs incurred to sell 29,750 units?3. For financial accounting purposes, what is the total amount of product costs incurred to make 31,500 units?4. For financial accounting purposes, what is the total amount of period costs incurred to sell 28,000 units? (For all requirements, do not round intermediate calculations.)
Solution
- The total amount of product costs incurred to make 29,750 units can be calculated by adding the costs of direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.
Direct materials: 261,800 Direct labor: 172,550 Variable manufacturing overhead: 98,175 Fixed manufacturing overhead: 202,200
Total product costs = 172,550 + 202,200 = $734,725
- The total amount of period costs incurred to sell 29,750 units can be calculated by adding the costs of fixed selling expense, fixed administrative expense, sales commissions, and variable administrative expense.
Fixed selling expense: 157,675 Fixed administrative expense: 127,925 Sales commissions: 83,300 Variable administrative expense: 68,425
Total period costs = 127,925 + 68,425 = $437,325
- The total amount of product costs incurred to make 31,500 units can be calculated similarly to the first question, but using the new unit amount.
Direct materials: 277,200 Direct labor: 182,700 Variable manufacturing overhead: 103,950 Fixed manufacturing overhead: 214,200
Total product costs = 182,700 + 214,200 = $778,050
- The total amount of period costs incurred to sell 28,000 units can be calculated similarly to the second question, but using the new unit amount.
Fixed selling expense: 148,400 Fixed administrative expense: 120,400 Sales commissions: 78,400 Variable administrative expense: 64,400
Total period costs = 120,400 + 64,400 = $411,600
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