Kubin Company's relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows:
Amount per Unit
Direct materials $ 8.00
Direct labor $ 5.00
Variable manufacturing overhead $ 2.50
Fixed manufacturing overhead $ 4.00
Fixed selling expense $ 4.50
Fixed administrative expense $ 3.50
Sales commissions $ 2.00
Variable administrative expense $ 1.50
Required:
1. If 20,000 units are produced and sold, what is the variable cost per unit produced and sold?
2. If 23,000 units are produced and sold, what is the variable cost per unit produced and sold?
3. If 20,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?
4. If 23,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold?
5. If 20,000 units are produced, what is the average fixed manufacturing cost per unit produced?
6. If 23,000 units are produced, what is the average fixed manufacturing cost per unit produced?
7. If 20,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
8. If 23,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
(Round per unit values to 2 decimal places)

1.) $19.00 ; 2.) $19.00 ; 3.) $380,000 ; 4.) $437,000 ; 5.) $4.30 ; 6.) $3.74 ; 7.) $86,000 ; 8.) $86,000

Explanation:

Given the following :

Relevant cost for 20,000 - 23,000 units range of production:

COST RELATED TO PRODUCED UNIT OF 21,500

Direct materials $ 8.00

Direct labor $ 5.00

Variable manufacturing overhead = $2.50

Fixed manufacturing overhead = $4.00

Fixed selling expense = $4.50

Fixed administrative expense = $3.50

Sales commissions = $2.00

Variable administrative expense = $1.50

1) Variable cost per unit produced and sold if 20000 units are produced and sold :

Direct material = $8.00

Direct labor = $5.00

Variable manufacturing overhead = $2.50

Sales commissions = $2.00

Variable administrative expense = $1.50

Variable cost per unit produced and sold = $(8 + 5 + 2.50 + 2 + 1.50) = $19.00

2) 2. If 23,000 units are produced and sold, what is the variable cost per unit produced and sold?

Variable cost per unit produced and sold = $(8 + 5 + 2.50 + 2 + 1.50) = $19.00

3.) Total amount of variable cost:

Variable cost per unit × number of units produced (20,000)

$19.00 × 20,000 = $380,000

4.) Total amount of variable cost:

Variable cost per unit × number of units produced (23,000)

$19.00 × 23,000 = $437,000

5.) Average fixed manufacturing cost :

Fixed manufacturing cost per unit = $4.00

If 20,000 units are produced

Related unit produced = 21,500

Total fixed manufacturing cost :

21,500 × $4 = $86,000

Average fixed manufacturing cost equals;

$86,000 / 20,000 = $4.30

6.) Average fixed manufacturing cost :

Fixed manufacturing cost per unit = $4.00

If 23,000 units are produced

Related unit produced = 21,500

Total fixed manufacturing cost :

21,500 × $4 = $86,000

Average fixed manufacturing cost equals;

$86,000 / 23,000 = $3.7391304

= $3.74

7.) Total amount of Fixed manufacturing overhead: 21,500 × $4 = $86,000

8.) Total amount of Fixed manufacturing overhead: 21,500 × $4 = $86,000

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