Question
Hernandez 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
Hernandez 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 $6.00
DIRECT LABOR $3.50
VARIABLE MANUFACTURING OVERHEAD $1.50
FIXED MANUFACTURING OVERHEARD $4.00
FIXED SELLING EXPENSES $3.00
FIXED ADMINISTRATIVE EXPENSES $2.00
SALES COMMISSIONS $1.00
VARIABLE ADMINISTRATIVE EXPENSES $.50
1. FOR FINANCIAL ACCOUNTING PURPOSES, WHAT IS THE TOTAL AMOUNT OF PRODUCT COSTS INCURRED TO MAKE 10,000 UNITS?
2. FOR FINANCIAL ACCOUNTING PURPOSES, WHAT IS THE TOTAL AMOUNT OF PERIOD COSTS INCURRED TO SELL 10,000 UNITS?
3. IF 8,000 UNITS ARE PRODUCED AND SOLD, WHAT IS THE VARIABLE COST PER UNIT PRODUCED AND SOLD?
4. IF 12,500 UNITS ARE PRODUCED AND SOLD, WHAT IS THE VARIABLE COST PER UNIT PRODUCED AND SOLD?
5. IF 8,000 UNITS ARE PRODUCED AND SOLD, WHAT IS THE TOTAL AMOUNT OF VARIABLE COSTS RELATED TO THE UNITS PRODUCED AND SOLD?
6. IF 12,5000 UNITS ARE PRODUCED AND SOLD, WHAT IT THE TOTAL AMOUNT OF VARIABLE COSTS RELATED TO THE UNITS PRODUCED AND SOLD?
7. IF 8,000 UNITS ARE PRODUCED, WHAT IS THE AVERAGE FIXED MANUFACTURING COST PER UNIT PRODUCED.
8. IF 12,500 UNITS ARE PRODUCED, WHAT IS THE AVERAGE FIXED MANUFACTURING COST PER UNIT PRODUCED.
9. IF 8,000 UNITS ARE PRODUCED, WHAT IS THE TOTAL AMOUNT OF FIXED MANUFACTURING COST INCURRED TO SUPPORT THIS LEVEL OF PRODUCTION.
10. IF 12,500 UNITS ARE PRODUCED, WHAT IS THE TOTAL AMOUNT OF FIXED MANUFACTURING COST INCURRED TO SUPPORT THIS LEVEL OF PRODUCTION.
11. IF 8,000 UNITS ARE PRODUCED, WHAT IS THE TOTAL AMOUNT OF MANUFACTURING OVERHEAD COST INCURRED TO SUPPORT THIS LEVEL OF PRODUCTION? WHAT IS THE TOTAL AMOUNT EXPRESSED ON A PER UNIT BASIS?
13. IF THE SELLING PRICE IS $22 PER UNIT, WHAT IS THE CONTRIBUTION MARGIN PER UNIT?
14. IF 11,000 UNITS PRODUCED, WHAT ARE THE TOTAL AMOUNTS OF DIRECT AND INDIRECT MANUFACTURING COSTS INCURRED TO SUPPORT THIS LEVEL OF PRODUCTION.
15. WHAT INCREMENTAL MANUFACTURING COST WILL HERNANDEZ INCUR IF IT INCREASES PRODUCTION FROM 10,0000 TO 10,001 UNITS?
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