Question

Kubin Company’s relevant range of production is 27,000 to 29,000 units. When it produces and sells 28,000 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.70
Direct labor	$	5.70
Variable manufacturing overhead	$	3.20
Fixed manufacturing overhead	$	6.70
Fixed selling expense	$	5.20
Fixed administrative expense	$	4.20
Sales commissions	$	2.70
Variable administrative expense	$	2.20

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 28,000 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 28,000 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 29,000 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 27,000 units?

Answer 1

Req 1.
Total Product cost of 28000 units
Matterial			(28000*8.70)		243600
Labour			(28000*5.70)		159600
Variable OH			(28000*3.20)		89600
Fixed manufacturing OH			(28000*6.70)		187600
Total Product cost of 28000 units					680400
Req 2:
Total period cost of 28000 units
Variable Sales commission			(28000*2.70)		75600
Variable admin expense			(28000*2.20)		61600
Fixed Selling expense			(28000*5.20)		145600
Fixed Admin expense			(28000*4.20)		117600
Total period cost of 28000 units					400400
Req 3:
Total Product cost of 29000 units
Matterial			(29000*8.70)		252300
Labour			(29000*5.70)		165300
Variable OH			(29000*3.20)		92800
Fixed manufacturing OH					187600
Total Product cost of 29000 units					698000
Rreq 4:
Total Period cost of 27000 units
Variable Sales commission			(27000*2.70)		72900
Variable admin expense			(27000*2.20)		59400
Fixed Selling expense					145600
Fixed Admin expense					117600
Total period cost of 27000 units					395500