Question

Required information

Foundational [LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 2-6, LO 2-7]

[The following information applies to the questions displayed below.]

Martinez Company’s relevant range of production is 8,500 units to 13,500 units. When it produces and sells 11,000 units, its unit costs are as follows:

	Amount Per Unit
Direct materials	$	6.10
Direct labor	$	3.60
Variable manufacturing overhead	$	1.40
Fixed manufacturing overhead	$	4.10
Fixed selling expense	$	3.10
Fixed administrative expense	$	2.10
Sales commissions	$	1.10
Variable administrative expense	$	0.55

Foundational 2-2

2.	For financial accounting purposes, what is the total amount of period costs incurred to sell 11,000 units?

      

Answer 1

Total period cost = $75,350

Working

	Per unit	Units	Total
Fixed selling expense	$        3.10	11000	$   34,100
Fixed administrative expense	$        2.10	11000	$   23,100
Sales commissions	$        1.10	11000	$   12,100
Variable administrative expense	$        0.55	11000	$      6,050
Total Period cost			$   75,350

Direct material, direct labor and overhead of factory are product cost. All costs other than product cost are period cost.