PROBLEM 1

Kubin Company's 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 5 2.00 Direct labor 5 4.00 Variable manufacturing overhead 5 1.50 Fixed manufacturing overhead 5 5.00 Fixed selling expense 5 3.50 Fixed administrative expense 5 2.50 Sales commissions $ 1.00 Variable administrative expense 5 0.50 Kubin Company's relevant range of production is 18,000to 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 5 2.00 Direct labor 5 4.00 Variable manufacturing overhead 5 1.50 Fixed manufacturing overhead 5 5.00 Fixed selling expense 5 3.50 Fixed administrative expense 5 2.50 Sales commissions 5 1.00 Variable administrative expense 5 3.50