Question

relevant range of activity is 6,000 units to 10,000 units. When it produces and sells 8,000 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	6.40
Direct labor	$	3.00
Variable manufacturing overhead	$	1.30
Fixed manufacturing overhead	$	13.20
Fixed selling expense	$	2.20
Fixed administrative expense	$	1.60
Sales commissions	$	0.60
Variable administrative expense	$	0.50

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 8,000 units? (Do not round intermediate calculations.)

b. If 9,000 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.)

c. If 9,000 units are sold, what is the total amount of variable costs related to the units sold? (Do not round intermediate calculations. Round "Per unit" answer to 2 decimal places.)

a.) Total prodcut cost

b.) variable cost per unit sold

c.) total variable cost

Answer 1

a) Calculate total product cost ;

Direct material per unit	6.40
Direct labour per unit	3.00
Variable manufacturing overhead per unit	1.30
Fixed manufacturing overhead per unit	13.20
Product cost per unit	23.90
Units produced	8000
Total product cost	191200

b) Variable cost per unit

Direct material per unit	6.40
Direct labour per unit	3.00
Variable manufacturing overhead per unit	1.30
Variable cost per unit	10.70

c.) total variable cost

Direct material per unit	6.40
Direct labour per unit	3.00
Variable manufacturing overhead per unit	1.30
Variable cost per unit	10.70
Units	9000
Total variable cost	96300