Cost Classifications (Static)

Kubin Companys 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:

	Average Cost per Unit
Direct materials	$	7.00
Direct labor	$	4.00
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	5.00
Fixed selling expense	$	3.50
Fixed administrative expense	$	2.50
Sales commissions	$	1.00
Variable administrative expense	$	0.50

Exercise 1-7 (Static) Direct and Indirect Costs [LO1-1]

Required:

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 20,000 units?

b. What is the total indirect manufacturing cost incurred to make 20,000 units?

2. Assume the cost object is the Manufacturing Department and that its total output is 20,000 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

3. Assume the cost object is the companys 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.

a. When the company sells 20,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives?

b. When the company sells 20,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 20,000 units? (Round per unit values to 2 decimal places.)

b. What is the total indirect manufacturing cost incurred to make 20,000 units? (Round per unit values to 2 decimal places.)

1a.	Direct materials per unit
	Direct labor per unit
	Direct manufacturing cost per unit	$0.00
	Number of units sold
	Total direct manufacturing cost	$0
1b.	Variable manufacturing overhead per unit
	Fixed manufacturing overhead per unit
	Indirect manufacturing cost per unit	$0.00
	Number of units sold
	Total indirect manufacturing cost	$0

2. Assume the cost object is the Manufacturing Department and that its total output is 20,000 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department? (Round per unit values to 2 decimal places.)

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

Show less

2a.	Direct materials per unit
	Direct labor per unit
	Variable manufacturing overhead per unit
	Fixed manufacturing overhead per unit
	Total manufacturing cost per unit	$0.00
	Number of units sold
	Total direct costs	$0
2b.	Total indirect costs

3. Assume the cost object is the companys 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.

a. When the company sells 20,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? (Round per unit value to 2 decimal places.)

b. When the company sells 20,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

Show less

3a.	Sales commissions per unit
	Number of units sold
	Total sales commission	$0
	Fixed portion of sales representatives compensation
	Total direct selling expense	$0
3b.	The total indirect selling expense