Kubin company’s relevant range of production is 18,000 to 22,000 units. when it produces and sells 20,000 units, its average costs per unit are as follows: amount per unit direct materials $ 7.00 direct labor $ 4.00 variable manufacturing overhead $ 1.50 fixed manufacturing overhead $ 5.00 fixed selling expense $ 3.50 fixed administrative expense $ 2.50 sales commissions $ 1.00 variable administrative expense $ 0.50 required: 1. if 18,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. if 22,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. if 18,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. if 22,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 5. if 18,000 units are produced, what is the average fixed manufacturing cost per unit produced? 6. if 22,000 units are produced, what is the average fixed manufacturing cost per unit produced? 7. if 18,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production? 8. if 22,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?

a)Variable cost= $14u

b)Variable cost=$14u

c) Total variable cost= $252000

d) Total variable cost= $308000

e) Fixed cost per unit= $12,22

f) Fixed cost per unit= $10

g) Total fixed manufacturing overhead= $100000

h) Total fixed manufacturing overhead= $100000

Explanation:

The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain expense levels can be expected to maintain. Outside of that relevant range, expenses will likely differ from the expected amount.

The range of production is between 18000 and 22000 units. In this range, variable and fixed costs will likely maintain.

We know that at 20000 units the variable and fixed costs are:

Variable:

Direct materials $ 7.00 unit

Direct labor $ 4.00 unit

Variable manufacturing overhead $ 1.50 unit

Sales commissions $ 1.00 unit

Variable administrative expense $ 0.50 unit

Total variable cost= $14u

Fixed costs:

Fixed manufacturing overhead $ 5.00*20000u=$10000

Fixed selling expense $ 3.50*20000u=$70000

Fixed administrative expense $ 2.50*20000u=$50000

Total fixed cost= $220000

a)Q=18000 (it is in the range)

Variable cost= $14u

b)Q=22000  (it is in the range)

Variable cost=$14u

c) Q=18000

Total variable cost= QxCv=18000*14=$252000

d)Q=22000

Total variable cost= QxCv=22000*14=$308000

e) Q=18000

Fixed cost per unit=total fixed cost/Q= 220000/18000=$12,22

f)Q=22000

Fixed cost per unit=total fixed cost/Q= 220000/22000=$10

g) Q=18000

Total fixed manufacturing overhead= $100000 (it doesn't change with production between range)

h) Q=22000

Total fixed manufacturing overhead= $100000 (it doesn't change with production between range)