Question
A company's relevant range of activity is 2,500 - 6,000 units. At a production and sales level of 4,000 units, the following are the average
A company's relevant range of activity is 2,500 - 6,000 units. At a production and sales level of 4,000 units, the following are the average costs per unit:
Direct materials $4.75
Direct labor $2.40
Variable manufacturing overhead $1.70
Fixed manufacturing overhead $0.90
Fixed selling expense $1.25
Fixed administrative expense $0.50
Sales commissions $0.30
Variable administrative expense $0.55
a) If 3,000 units are sold, what will be the total period costs?
b) If 3,000 units are sold, what will be the total variable product costs?
c) What incremental cost will the company incur if production and sales increase from 4,000 to 4,001 units?
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