g. If 5,000 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis?
Answer:
a.
Direct materials
$5.20
Direct labor
3.40
Variable manufacturing overhead
1.35
Variable manufacturing cost per unit
$9.95
Total variable manufacturing cost
($9.95 per unit × 4,000 units produced)
$39,800
Total fixed manufacturing overhead cost
($3.00 per unit × 4,000 units produced)
12,000
Total product (manufacturing) cost
$51,800
b.
Sales commissions
$1.50
Variable administrative expense
0.45
Variable selling and administrative expense per unit
$1.95
Total variable selling and administrative expense
($1.95 per unit × 4,000 units sold)
$7,800
Total fixed selling and administrative expense
($0.70 per unit × 4,000 units + $0.40 per unit × 4,000 units)
4,400
Total period (nonmanufacturing) cost
$12,200
c.
Direct materials
$5.20
Direct labor
3.40
Variable manufacturing overhead
1.35
Sales commissions
1.50
Variable administrative expense
0.45
Variable cost per unit sold
$11.90
d.
Variable cost per unit sold (a)
$11.90
Number of units sold (b)
5,000
Total variable costs (a) × (b)
$59,500
e.
Total fixed manufacturing overhead cost
($3.00 per unit × 4,000 units*) (a)
$12,000
Number of units produced (b)
5,000
Average fixed manufacturing cost per unit produced (a) ÷ (b)
$2.40
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 units.
f.
Fixed manufacturing overhead per unit
$3.00
Number of units produced
4,000
Total fixed manufacturing overhead cost
$12,000
g.
Total variable manufacturing overhead cost
($1.35 per unit × 5,000 units)
$6,750
Total fixed manufacturing overhead cost
($3.00 per unit × 4,000 units*)
12,000
Total manufacturing overhead cost (a)
$18,750
Number of units produced (b)
5,000
Manufacturing overhead per unit (a) ÷ (b)
$3.75
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 units.
Difficulty: 2 Medium
Topic: Cost Classifications for Assigning Costs to Cost Objects; Cost Classifications for Preparing Financial Statements; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.; 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
282) Menk Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$6.25
Direct labor
$3.25
Variable manufacturing overhead
$1.45
Fixed manufacturing overhead
$18,000
Sales commissions
$0.50
Variable administrative expense
$0.40
Fixed selling and administrative expense
$9,000
Required:
a. If 5,000 units are sold, what is the variable cost per unit sold?
b. If 5,000 units are sold, what is the total amount of variable costs related to the units sold?