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Answer:
Martinez Company
1. Total amount of product costs for 10,000 units:
= 10,000 * $13.90
= $139,000
2. Period costs for 10,000 units:
= 10,000 * $6.15
= $61,500
3. Variable cost per unit of 8,000 produced and sold:
= $11.55
4. Variable cost per unit of 12,500 produced and sold:
= $11.55
5. Total variable costs for 8,000 units produced and sold:
= 8,000 * $11.55
= $92,400
6. Total variable costs for 12,500 units produced and sold:
= 12,500 * $11.55
= $144,375
7. Average fixed manufacturing cost per unit produced for 8,000 units:
= $4.00
8. Average fixed manufacturing cost per unit produced for 12,500 units:
= $4.00
9. Total fixed manufacturing cost for 8,000 units:
= 8,000 x $4.00
= $32,000
10. Total fixed manufacturing cost for 12,500 units:
= 12,500 x $4.00
= $50,000
11. Total amount of manufacturing overhead costs for 8,000 units:
= 8,000 * $5.60
= $44,800
per unit = $5.60
Variable manufacturing overhead = $1.60
Fixed manufacturing overhead = $4.00
Total per unit = $5.60
12. Total amount of manufacturing overhead for 12,500 units:
= 12,500 x $5.60
= $70,000
per unit = $5.60
Variable manufacturing overhead = $1.60
Fixed manufacturing overhead = $4.00
Total per unit = $5.60
13. Contribution margin per unit:
Selling price = $21.40
Variable manufacturing cost per unit = $9.90
Contribution margin per unit $11.50
14. Total amounts of direct and indirect manufacturing costs for 12,000 units:
Direct manufacturing costs = $9.90 x 12,000 = $118,800
Indirect manufacturing costs = $4.00 x 12,000 = $48,000
15. Incremental manufacturing cost if Martinez increases production from 10,000 to 10,001:
= $9.90
Explanation:
a) Data and Calculations:
Average Cost Per Unit
Direct materials $ 5.40
Direct labor $ 2.90
Variable manufacturing overhead $ 1.60
Total Variable Costs per unit $ 9.90
Fixed manufacturing overhead $ 4.00
Total product cost per unit $13.90
Period Costs:
Fixed selling expense $ 2.40
Fixed administrative expense $ 2.10
Sales commissions $ 1.10
Variable administrative expense $ 0.55
Total period costs per unit $6.15
All Variable costs:
Variable production costs $9.90
Sales Commission $1.10
Variable administrative expense $ 0.55
Total Variable costs $11.55
All Fixed Costs:
Fixed manufacturing overhead $ 4.00
Fixed selling expense $ 2.40
Fixed administrative expense $ 2.10
Total fixed costs per unit $8.50
The total amount for the product cost incurred will be $139000.
- The period cost for 10000 units will be $61500. If 8,000 units are produced and sold, the variable cost per unit produced and sold will be $11.55. If 12,500 units are produced and sold, the variable cost per unit produced and sold will be $11.55.
- If 8,000 units are produced and sold, the total amount of variable costs that are related to the units produced and sold will be $92400.
- The total variable cost for 12500 units will be $144375. The average fixed manufacturing cost for 8000 units and 12500 units will be $4.00.
- The total fixed manufacturing cost for 8000 units and 12500 units will be $32000 and $50000 respectively.
The total amount of manufacturing overhead costs for 8000 units will be;
= 8000 × $5.60
= $44800
The total amount of manufacturing overhead for 12500 units will be:
= 12500 × $5.60
= $70000
The contribution margin per unit will be:
= Selling price - Variable manufacturing cost per unit.
= $21.40 - $9.90
= $11.50
The total amount of direct manufacturing cost will be:
= $9.90 × 12000 = $118800
The total amount of indirect manufacturing cost will be:
= $4.00 × 12000 = $48000
Lastly, the incremental manufacturing cost will be $9.90.
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