Vattes, Incorporated, manufactures and sells two products: Product 15 and Product U1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Unit $ 261.60 $121.60 Direct Labor- Expected Hours Per Production Unit 700 7.0 200 4.0 Product 15 4,900 Product U1 800 Total direct labor-hours 5,700 The direct labor rate is $22.00 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Activity Cost Pools Labor-related Machine setups Order size Product 15 Product U1 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity Expected Activity Product 15 Product U1 4,900 300 4,900 Activity Measures DLHS setups MHS Total Direct Labor- Hours Estimated Overhead Cost $268,698 37,324 633,895 $ 939,917 800 400 4,800 Total 5,700 700 9,700

Vattes, Incorporated, manufactures and sells two products: Product 15 and Product U1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Unit $ 261.60 $121.60 Direct Labor- Expected Hours Per Production Unit 700 7.0 200 4.0 Product 15 4,900 Product U1 800 Total direct labor-hours 5,700 The direct labor rate is $22.00 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Activity Cost Pools Labor-related Machine setups Order size Product 15 Product U1 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity Expected Activity Product 15 Product U1 4,900 300 4,900 Activity Measures DLHS setups MHS Total Direct Labor- Hours Estimated Overhead Cost $268,698 37,324 633,895 $ 939,917 800 400 4,800 Total 5,700 700 9,700

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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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 $ 5.50 Direct labor $ 3.00 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 2.50 Fixed administrative expense $ 2.00 Sales commissions $ 1.00 Variable administrative expense $ 0.50 6. If 12,500 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.)
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