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mpany's relevant range of pr sells 20,000 units, its average costs per

mpany's relevant range of pr sells 20,000 units, its average costs per

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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EXERCISE 1-7 Direct and Indirect Costs L01-1 2.000.81 10 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: Juris Required: 1. 2. 3. 4. a. b. a. b. the Untus ha babubong asin Direct materials.. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense.. Sales commissions...... Variable administrative expense. b. Average Cost per Unit $7.00 $4.00 $1.50 $5.00 $3.50 $2.50 $1.00 $0.50 Assume the cost object is units of production: What is the total direct manufacturing cost incurred to make 20,000 units? What is the total indirect manufacturing cost incurred to make 20,000 units? Assume the cost object is the Manufacturing Department and that its total output is 20,000 units. How much total manufacturing cost is directly traceable to the Manufacturing Department? How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? Assume the cost object is the company's various sales representatives. 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. balups 1-2 W 00.0 nde, a. When the company sells 20,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? When the company sells 20,000 units, what is the total indirect selling expense that can- not be readily traced to individual sales representatives? Are Kubin's administrative expenses always going to be treated as indirect costs in its internal management reports?
Transcribed Image Text:EXERCISE 1-7 Direct and Indirect Costs L01-1 2.000.81 10 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: Juris Required: 1. 2. 3. 4. a. b. a. b. the Untus ha babubong asin Direct materials.. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense.. Sales commissions...... Variable administrative expense. b. Average Cost per Unit $7.00 $4.00 $1.50 $5.00 $3.50 $2.50 $1.00 $0.50 Assume the cost object is units of production: What is the total direct manufacturing cost incurred to make 20,000 units? What is the total indirect manufacturing cost incurred to make 20,000 units? Assume the cost object is the Manufacturing Department and that its total output is 20,000 units. How much total manufacturing cost is directly traceable to the Manufacturing Department? How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? Assume the cost object is the company's various sales representatives. 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. balups 1-2 W 00.0 nde, a. When the company sells 20,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? When the company sells 20,000 units, what is the total indirect selling expense that can- not be readily traced to individual sales representatives? Are Kubin's administrative expenses always going to be treated as indirect costs in its internal management reports?
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