**Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and…**

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## Question “Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and…”

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 | $ | 5.40 | |

Direct labor | $ | 2.90 | |

Variable manufacturing overhead | $ | 1.60 | |

Fixed manufacturing overhead | $ | 4.00 | |

Fixed selling expense | $ | 2.40 | |

Fixed administrative expense | $ | 2.10 | |

Sales commissions | $ | 1.10 | |

Variable administrative expense | $ | 0.55 | |

1. For financial accounting purposes, what is the total amount

of product costs incurred to make 10,000 units? **(Do not
round intermediate calculations.)**

2. For financial accounting purposes, what is the total amount

of period costs incurred to sell 10,000 units? **(Do not
round intermediate calculations.)**

3. If 8,000 units are produced and sold, what is the variable

cost per unit produced and sold? **(Round your answer to 2
decimal places.)**

4. If 12,500 units are produced and sold, what is the variable

cost per unit produced and sold? **(Round your answer to 2
decimal places.)**

5. If 8,000 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.)**

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.)**

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? **(Round your answer to
2 decimal places.)**

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 this total amount expressed on a per unit

basis? **(Round your “per unit” answer to 2 decimal places
and other answers to the nearest whole dollar amount.)**

12. If 12,500 units are produced, what is the total amount of

manufacturing overhead cost incurred to support this level of

production? What is this total amount expressed on a per unit

basis? **(Round your “per unit” answer to 2 decimal places
and other answers to the nearest whole dollar amount.)**

13. If the selling price is $21.40 per unit, what is the

contribution margin per unit? **(Do not round intermediate
calculations. Round your answer to 2 decimal places.)**

14. If 12,000 units are produced, what are the total amounts of

direct and indirect manufacturing costs incurred to support this

level of production? **(Do not round intermediate
calculations.)**

15. What incremental manufacturing cost will Martinez incur if

it increases production from 10,000 to 10,001 units? **(Round
your answer to 2 decimal places.)**

## Answer

1) | Total product cost | ||||||||

Materials directly | 5.4 | 10,000 | = | 54000 | |||||

Direct labor | 2.9 | 10,000 | = | 29000 | |||||

VMOH | 1.6 | 10,000 | = | 16000 | |||||

FMOH | 4 | 10,000 | = | 40000 | |||||

Total product cost | 139000 | Answer | |||||||

2) | Total cost of the period | ||||||||

Fixed selling cost | 2.4 | 10,000 | = | 24000 | |||||

Fixed administrative expenses | 2.1 | 10,000 | = | 21000 | |||||

Sales commission | 1.1 | 10,000 | = | 11000 | |||||

Variable adm expense | 0.55 | 10,000 | = | 5500 | |||||

Amount of time cost | 61500 | Answer | |||||||

3) | Variable cost per unit |
11.55 |
answer | ||||||

4) | Variable cost per unit |
11.55 |
answer | ||||||

5) | Total cost of variable costs | 8,000 | units= | 92400 | Answer | ||||

6) | Total cost of variable costs | 12,500 | units= | 144375 | Answer | ||||

7) | Average FMOH cost per unit produced | ||||||||

4 | * | 10,000 | / | 8,000 | = |
5 |
answer | ||

8) | Average FMOH cost per unit produced | ||||||||

4 | * | 10,000 | / | 12,500 | = |
3.2 |
answer | ||

9) | total Fixed manufacturing overhead cost | ||||||||

5 | * | 8,000 | = | 40000 | Answer | ||||

10) | total Fixed manufacturing overhead cost | ||||||||

3.2 | * | 12,500 | = | 40000 | Answer | ||||

11) | Total manufacturing overhead cpst | ||||||||

VMOH | 1.6 | 8,000 | = | 12800 | |||||

FMOH | 40000 | ||||||||

Total manufacturing overhead cost |
52800 |
answer | |||||||

Total amount expressed as cost per unit |
6.6 |
answer | |||||||

12) | VMOH | 1.6 | 12,500 | = | 20000 | ||||

FMOH | 40000 | ||||||||

Total manufacturing overhead cost |
60000 |
answer | |||||||

Total amount expressed as cost per unit |
4.8 |
answer | |||||||

13) | Contribution margin per unit sold | ||||||||

selling price per unit | 21.4 | ||||||||

total variable cost per unit | 11.55 | ||||||||

Contribution margin per unit sold | 9.85 | Answer | |||||||

14) | Total amount of direct and indirect manufacturing costs | ||||||||

Materials directly | 5.4 | 12,000 | = | 64800 | |||||

Direct labor | 2.9 | 12,000 | = | 34800 | |||||

VMOH | 1.6 | 12,000 | = | 19200 | |||||

FMOH | 4 | 10,000 | = | 40000 | |||||

Total product cost | 158800 | Answer | |||||||

15) | incremental cost per unit product | 9.9 | |||||||

(Direct materials+direct labor+VMOH) | |||||||||

## Conclusion

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