Foundational 15 Chapter 1 Essay

642 Words Apr 25th, 2016 3 Pages
Chapter 1
The Foundational 15

Martinez Company’s relevant range of Production is 7,500 to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows:

| AmountPer Unit |
Direct Materials | $ 6.00 |
Direct Labor | 3.50 |
Variable Manufacturing Overhead | 1.50 |
Fixed Manufacturing Overhead | 4.00 |
Fixed Selling Expenses | 3.00 |
Fixed Administrative Expense | 2.00 |
Sales Commissions | 1.00 |
Variable Administration Expense | 0.50 |

Required:
1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

Direct Materials $6.00
Direct Labor $3.50
Variable Manuf OH $1.50
Fixed Manuf
…show more content…
8000 x $4.00 = $32,000

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

12500 x $4.00 = $50,000

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Variable Manuf. OH $1.50
Fixed Manuf. OH $4.00
$5.50

8000 x $5.50 = $44,000

12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Variable Manuf. OH $1.50
Fixed Manuf. OH $4.00
$5.50

12500 x $5.50 = $68,750

13. If the selling price is $22 per unit, what is the contribution margin per unit sold?

Selling Price $22.00
* Direct Materials $6.00
* Direct Labor $3.50
* Var. Manuf. OH $1.50
* Sales Commission $1.00
* Var Admin Exp $0.50 $12.50
Contribution Margin $9.50

14. If 11,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?

Direct Materials $6.00
Direct Labor $3.50
Variable Manuf. OH $1.50
Fixed Manuf. OH $4.00
$15.00

15. What total incremental cost will…

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