Question

Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	6.70
Direct labor	$	4.20
Variable manufacturing overhead	$	1.40
Fixed manufacturing overhead	$	4.00
Fixed selling expense	$	3.70
Fixed administrative expense	$	2.10
Sales commissions	$	1.10
Variable administrative expense	$	0.55

4. If 12,500 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)

5. If 8,000 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.)

6. If 12,500 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.)

7. If 8,000 units are produced, what is the average fixed manufacturing cost per unit produced?

8. If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced? (Round your answer to 2 decimal places.)

Answer 1

Question - 4

variable cost per unit produced and sold

The term sold here implies that it should also include variable selling and administrative cost.

Direct materials	6.7
Direct labor	4.2
Variable Manufacturing OH	1.4
Variable cost per Unit Produced	12.3
Sales commissions	1.1
Variable administrative exp	0.55
Variable cost per Unit sold	13.95

Note : if only entry is given ......... enter 13.95 as final answer

Question - 5

Total amount of variable cost at 8000 Units = 13.95 * 8000 = 111600

Question - 6

Total amount of variable cost at 12500 units = 13.95 * 12500 = 174375

Question - 7

Average Fixed manufacturing cost = Total Fixed manufacturing cost / Number of units

= 40000 / 8000 Units = 5 per Unit

Question - 8

= 40000 / 12500 = 3.2 per Unit