EXERCISE 1-7 Direct and Indirect Costs L01-12.000.81 10Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces andsells 20,000 units, its average costs per unit are as follows:JurisRequired:1.2.3.4.a.b.a.b.theUntus ha babubong asinDirect materials..Direct laborVariable manufacturing overheadFixed manufacturing overheadFixed selling expenseFixed administrative expense..Sales commissions......Variable administrative expense.b.Average Costper Unit$7.00$4.00$1.50$5.00$3.50$2.50$1.00$0.50Assume 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 theManufacturing Department?Assume the cost object is the company's various sales representatives. Furthermore, assumethat the company spent $50,000 of its total fixed selling expense on advertising and theremainder of the total fixed selling expense comprised the fixed portion of the company'ssales representatives' compensation.balups1-2 W00.0nde,a. When the company sells 20,000 units, what is the total direct selling expense that can bereadily 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 internalmanagement reports?

1a. Total direct cost per unit = 7 + 4 = $11.00 Total direct costs = 11 x 20,000 = $220,000 1b.…

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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