Question

# Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and...

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 \$ 6.30 Direct labor \$ 3.80 Variable manufacturing overhead \$ 1.50 Fixed manufacturing overhead \$ 4.00 Fixed selling expense \$ 3.30 Fixed administrative expense \$ 2.00 Sales commissions \$ 1.00 Variable administrative expense \$ 0.50

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.)

12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.)

13. If the selling price is \$22.30 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

14. If 11,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production? (Do not round intermediate calculations.)

15. What incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units? (Round your answer to 2 decimal places.)

11) Total manufacturing overhead = (8000*1.50+10000*4) = \$52000

Per unit = 52000/8000 = \$6.50 per unit

12) Total manufacturing overhead = (12500*1.5+10000*4) = 58750

Per unit = 58750/12500 = \$4.70

13) Variable cost per unit = 6.3+3.8+1.5+1.0+.50 = 13.10 per unit

Contribution margin per unit = 22.30-13.10 = \$9.20 per unit

14) Calculate total manufacturing cost

 Direct manufacturing cost Direct material (11000*6.3) 69300 Direct labor (11000*3.8) 41800 111100 Indirect manufacturing cost Variable manufacturing overhead (11000*1.5) 16500 Fixed manufacturing overhead 40000 56500

15) Incremental manufacturing cost = 6.3+3.8+1.5 = \$11.60 per unit

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