Direct and Indirect Costs 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: Average cost 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 1 Assume the cost object is units of production a What is the total direct manufacturing cost incurred to make 20,000 units? b What is the total indirect manufacturing cost incurred to make 20,000 units. 2 Assume the cost object is the Manufacturing Department and that its total output is 20,000 units. a How much total manufacturing cost is directly traceable to the Manufacturing Department? b How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? 3 Assume the cost object is the company's various sales representative. Furthermore, assume that the company spent $50,000 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives' compensation. a When the company sells 20,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b When the company sells 20,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives? 4 Are Kubin's administrative expenses always going to be treated as indirect costs in its internal management reports?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

Direct and Indirect Costs

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:
Average
cost 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
1 Assume the cost object is units of production
a What is the total direct manufacturing cost incurred to make 20,000 units?
b What is the total indirect manufacturing cost incurred to make 20,000 units.
2 Assume the cost object is the Manufacturing Department and that its total output is 20,000 units.
a How much total manufacturing cost is directly traceable to the Manufacturing Department?
b How much total manufacturing cost is an indirect cost that cannot be easily traced to the
Manufacturing Department?
3 Assume the cost object is the company's various sales representative. Furthermore, assume
that the company spent $50,000 of its total fixed selling expense on advertising and the
remainder of the total fixed selling expense comprised the fixed portion of the company's
sales representatives' compensation.
a When the company sells 20,000 units, what is the total direct selling expense that can be
readily traced to individual sales representatives?
b When the company sells 20,000 units, what is the total indirect selling expense that
cannot be readily traced to individual sales representatives?
4 Are Kubin's administrative expenses always going to be treated as indirect costs in its internal
management reports?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions