Question

Required information

The Foundational 15 [LO1-1, LO1-2, LO1-3, LO1-4, LO1-5, LO1-6]

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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	$	5.70
Direct labor	$	3.20
Variable manufacturing overhead	$	1.60
Fixed manufacturing overhead	$	4.00
Fixed selling expense	$	2.70
Fixed administrative expense	$	2.10
Sales commissions	$	1.10
Variable administrative expense	$	0.55

Foundational 1-3

3. If 8,000 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)

Answer 1

Calculation of Variable cost per unit
Direct Material	$5.70
Direct Labor	$3.20
Variable manufacturing overhead	$1.60
Sales commissions	$1.10
Variable administrative expense	$0.55
Total Variable cost per unit	$12.15

Variable cost per unit produced and sold when 8000 units are produced and sold = $ 12.15

Variable cost per unit does not change within the relevant range of output. Since variable cost per unit is to be calculated, hence other cost i.e Fixed manufacturing overhead, Fixed selling expense and Fixed administrative expense will not be considered.

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