Please solve and explain: The following information applies to the questions dis
ID: 2340880 • Letter: P
Question
Please solve and explain:
The following information applies to the questions displayed below.) Martinez Company's relevant range of production is 8,500 units to 13,500 units. When it produces and sells 11,000 units, its unit costs are as follows Direct materials Direct labor Varlable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commisslons Varlable administrative expense Amount Per Unit $ 5.10 $2.60 $1.60 $ 3.10 $ 210 2.10 $1.10 $0.55Explanation / Answer
14-a)Direct manufacturing cost = units [direct material cost per unit +direct abor cost per unit]
= 12000[5.1+2.6]
= 12000* 7.7
= $ 92400
14b)Fixed cost remain constant irrespective of change in output within a relevant range.fixed manufacturing cost at 11000 units = 11000*3.1=34100
Total indirect manufacturing cost =[ units *v ariable manufacturing overhead]+ fixed manufacturing overhead
= [1.6*12000]+34100
= 53300
15)variable cost varies with change in level of output .fixed cost remain constant within a relevant range .so with increase in output from 11000 to 11001 ,
incremental cost will include onlyvariable cost
Total incremental cost (for only one unit 11001-11000]= direct material+ direct labor+ variable manufacturing overhead
= 5.1+2.6+1.6
=$ 9.3 per unit