Question

Rose Company has a relevant range of production between 10,000 and 25,000 units. The following cost data represents average cost per unit for 15,000 units of production.

	Average Cost per Unit
Direct Materials	$13
Direct Labor	10
Indirect Materials	1
Fixed manufacturing overhead	5
Variable manufacturing overhead	2
Fixed selling and administrative expenses	8
Variable sales commissions	25

Using the cost data from Rose Company, answer the following questions:

A. If 10,000 units are produced, what is the variable cost per unit?

Variable cost per unit $

B. If 17,000 units are produced, what is the variable cost per unit?

Variable cost per unit $

C. If 21,000 units are produced, what are the total variable costs?

Total variable costs $

D. If 11,000 units are produced, what are the total variable costs?

Total variable costs $

E. If 20,000 units are produced, what are the total manufacturing overhead costs incurred?

Total manufacturing overhead costs $

F. If 24,000 units are produced, what are the total manufacturing overhead costs incurred?

Total manufacturing overhead costs $

G. If 20,000 units are produced, what are the per unit manufacturing overhead costs incurred? If required, round final answer to two decimal places.

Manufacturing overhead costs per unit $

H. If 25,000 units are produced, what are the per unit manufacturing overhead costs incurred? If required, round final answer to two decimal places.

Manufacturing overhead costs per unit $

Answer 1

a) Variable cost per unit

Direct material	13
Direct labor	10
Indirect Materials	1
Variable manufacturing overhead	2
Variable sales commissions	25
Variable cost per unit	51

b) Variable cost per unit = 51

c) Total Variable cost = 21000*51 = 1071000

d) Total variable cost = 11000*51 = 561000

e) Total manufacturing overhead = (20000*3+15000*5) = 135000

f) Total manufacturing overhead = (24000*3+75000) = 147000

g) Overhead cost per unit = 135000/20000 = 6.75

h) Per unit manufacturing overhead = (15000*5+25000*3)/25000 = 6