Kubin Company’s relevant range of production is 30,000 to 35,000 units. When it produces and sells 32,500 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 9.00 Direct labor $ 6.00 Variable manufacturing overhead $ 3.50 Fixed manufacturing overhead $ 7.00 Fixed selling expense $ 5.50 Fixed administrative expense $ 4.50 Sales commissions $ 3.00 Variable administrative expense $ 2.50 Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 32,500 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 32,500 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 35,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 30,000 units? (For all requirements, do not round intermediate calculations.)

Kubin Company

1. Total amount of product costs incurred to make 32,500 units:

= $846,250

2. The total amount of period costs incurred to sell 32,500 units:

= $290,000

3. The total amount of products costs incurred to make 35,000 units:

= $892,500

4. The total amount of period costs incurred to sell 30,000 units:

= $282,500

Explanation:

a) Data and Calculations:

Relevant production range = 30,000 to 35,000 units

Actual production and sales = 32,500 units

Average Costs per Unit:

Direct materials                                $ 9.00

Direct labor                                       $ 6.00

Variable manufacturing overhead  $ 3.50

Fixed manufacturing overhead       $ 7.00  $25.50

Fixed selling expense                      $ 5.50

Fixed administrative expense         $ 4.50

Sales commissions                          $ 3.00

Variable administrative expense    $ 2.50

1. Total amount of product costs incurred to make 32,500 units:

Direct materials                                $ 9.00

Direct labor                                       $ 6.00

Variable manufacturing overhead  $ 3.50

Fixed manufacturing overhead       $ 7.00  

Total product cost per unit            $25.50

Total product costs:

Variable costs = $601,250 ($18.50 * 32,500)

Fixed costs =       245,000 ($7.00 * 35,000)

Total product = $846,250

2. The total amount of period costs incurred to sell 32,500 units:

Fixed selling expense                      $ 5.50 * 35,000 = $192,500

Sales commissions                          $ 3.00 * 32,500 =     97,500

Total period costs = $290,000

3. The total amount of products costs incurred to make 35,000 units:

= $892,500 (35,000 * $25.50)

4. The total amount of period costs incurred to sell 30,000 units:

Fixed selling expense                      $ 5.50 * 35,000 = $192,500

Sales commissions                          $ 3.00 * 30,000 =     90,000

Total period costs = $282,500

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