Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.20 Direct labor $ 3.70 Variable manufacturing overhead $ 1.60 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 3.20 Fixed administrative expense $ 2.20 Sales commissions $ 1.20 Variable administrative expense $ 0.45 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 this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places.) A. Total Manufacturing Cost = _____________ B. Manufacturing Overhead Per Unit = ____________ 13. If the selling price is $22.20 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) C. Contribution Margin Per Unit = _____________ 15. What incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units? (Round your answer to 2 decimal places.) D. Incremental Cost Per Unit Produced = _______________
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:
| Average Cost per Unit | |
|---|---|
| Direct materials | $ 6.20 |
| Direct labor | $ 3.70 |
| Variable manufacturing |
$ 1.60 |
| Fixed manufacturing overhead | $ 4.00 |
| Fixed selling expense | $ 3.20 |
| Fixed administrative expense | $ 2.20 |
| Sales commissions | $ 1.20 |
| Variable administrative expense | $ 0.45 |
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 this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places.)
A. Total
B. Manufacturing Overhead Per Unit = ____________
13. If the selling price is $22.20 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
C. Contribution Margin Per Unit = _____________
15. What incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units? (Round your answer to 2 decimal places.)
D. Incremental Cost Per Unit Produced = _______________
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