Question 2 and 3 Kubin Company's relevant range o… (2023)

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Question 2 and 3 Kubin Company's relevant range o… (1)

question 2 and 3

Kubin Company's relevant range of production is 27,000 to 29.000 units. When it produces and sells 28,000 units, its average costs per unit are as follows: points Average Cost per Unit $ 8.70 $ 5.70 $ 3.20 $6.70 $ 5.20 $ 4.20 $2.70 $ 2.20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense eBook Print References Required: 1. Assume the cost object is units of production: a. What is the total direct manufacturing cost incurred to make 28,000 units? b. What is the total indirect manufacturing cost incurred to make 28.000 units 2. Assume the cost object is the Manufacturing Department and that its total output is 28,000 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 company s various sales representatives. Furthermore, assume that the company spent $117600 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 28,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b. When the company sells 28.000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3

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Kubin Company's relevant range production =27000 Unit - 29000 unit
Produced and Sells -Unit 28,000
Average cost per unit-$/Unit
Direct material 8.70
Direct Labour 5.70
Operating cost(a)-DM+DL 14.40
Number of Unit (b) 28,000
1 -a) Total direct Manufacturing cost(a*b)$ 4,03,200 (28000*$14.4)
Variable manufactirng cost 3.20
Fixed manufacturing overhead 6.70
Indirect cost $/ unit (c)-VM+FM 9.90
1 -b) Total direct Manufacturing cost(b*c)$ 2,77,200 (28000*$9.9)
Manufacturing cost
Direct material 8.70
Direct Labour 5.70
Variable manufactirng cost 3.20
Fixed manufacturing overhead 6.70
Manufacturing cost $/ Unit- e(DM+DL+VM+FM) 24.30
2-a) Total Manufacturing cost(b*e)$ 6,80,400 (28000*$24.3)
2- b) No indirect cost - all cost already identified
3) Fixed selling expeses $/ Unit F 5.20
a) Number of Unit (b) 28,000
Selling Fixed cost F*b) $ 1,45,600 (28000*$5.2)
Less-
Advertisement cost $ 1,17,600
Fixed part of rest amount $ 28,000
Total direct Selling Price
Sales Commission $/ unit (g) 2.70
Number of Unit (b) 28,000
Total Selling commission(g*b) $ 75,600 (28000*$2.7)
Add- Fixed part of above amount $ 28,000
3- a) Total direct Selling Price$ 1,03,600
b) the total Indirect selling expenses that cannot
be readily traced amoun to $ 1,17,600

.

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FAQs

What is the relevant range of production for the Kubin company? ›

Kubin Company's relevant range of production is 18,000 to 22,000 units.

What is a company's relevant range of production? ›

Relevant range is an accounting term that describes the parameters of production or activity within which a company maintains the same fixed costs. In accounting, fixed costs are constant and independent of specific production rates.

What is the total amount of product costs incurred to make 10 000 units? ›

Answer and Explanation: The total amount of product costs incurred to make 10,000 units is $150,000. The next step is to determine the total product cost: Total product cost = Units produced × Total product cost per unit.

What is Martinez company's relevant range of production 7500 units to? ›

Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table.

What is Martinez company's relevant range of production quizlet? ›

Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows: Amount Per Unit Direct materials... $6.00 Direct labor...

What is the relevant range quizlet? ›

The relevant range is the range of activity over which a company expects to operate during the year.

What is an example of a relevant range? ›

Relevant Range:

The relevant range is the range of activity (e.g., production or sales) over which these relationships are valid. For example, if the factory is operating at capacity, increasing production requires additional investment in fixed costs to expand the facility or to lease or build another factory.

Why is the relevant range important? ›

Why is relevant range important? Relevant range is important because if you make the assumption that all of your costs will remain constant, whether they are fixed or variable, you may make errors on your projections.

What are within the relevant range variable costs can be expected to? ›

Within a relevant range, the amount of variable cost per unit remains constant at each activity level. Variable costs include things like inventory costs, ingredients, or others that are involved in producing units and will increase or decrease with changes in the volume of sales.

How do you calculate total product manufacturing cost per unit? ›

To determine the total manufacturing cost per unit, you need to divide your total manifesting costs by the total number of units produced during a given period.

How do you calculate total manufacturing cost of a product? ›

The formula for calculating total manufacturing cost is quite simple. Total manufacturing cost = direct materials + direct labor + manufacturing overhead.

What total incremental cost will Martinez incur if it increases production from 10000 to 10001 units? ›

The total incremental costs Martinez will incur if it increases production from 10,000 to 10,001 units is $11. The next step is to determine the incremental cost: Incremental cost of production = Unit variable cost × (Units increased) Incremental cost of production = $11 × 1 unit.

What is the relevant range of Schonhardt Corporation? ›

Schonhardt Corporation's relevant range of activity is 3,000 units to 7,000 units.

What is the variable cost per unit produced and sold if 14000 units are produced and sold? ›

If 14,000 units are produced and sold, the total amount of variable cost related to the units produced and sold is $231,000.

Is the relevant range the range over which the company expects to operate? ›

The relevant range is the range over which the company expects to operate during a year. Mixed costs change proportionately with changes in the activity level. Mixed costs change in total but not proportionately with changes in the activity level (“Mixed Costs”).

Which one of the following is a name for the range over which a company expects to operate a mixed range b fixed range c variable range d relevant range? ›

Answer and Explanation: Correct Answer: Option d. Relevant range. A company expects to operate over a relevant range.

When a company has a production bottleneck? ›

In production and project management, a bottleneck is a process in a chain of processes, such that its limited capacity reduces the capacity of the whole chain. The result of having a bottleneck are stalls in production, supply overstock, pressure from customers, and low employee morale.

What does the relevant range describe? ›

The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.

What does relevant range assume? ›

The relevant range is the range of activity where the assumption that cost behavior is a straight line (linear) is reasonably valid. Managerial accountants like to assume that the relationship between a cost and an activity run in a straight line.

Which statement best describes the relevant range? ›

The correct answer to this question is c) The relevant range is the range of output over which cost assumptions are valid.

What is the difference within the relevant range? ›

Within the relevant range, the variable cost per unit is constant for all levels of production but varies in total based on the output produced. As the number of units increases, the total variable cost increases. Within the relevant range, the total fixed cost remains constant.

Is the relevant range the normal range of output? ›

The relevant range is the range of output over which the assumed cost relationship is valid for the normal operations of a firm. The relevant range limits the cost relationship to the range of operations that the firm normally expects to occur.

What is the relevant range in a cost behavior relationship? ›

Cost behavior is nothing more than the sensitivity of costs to changes in production or sales volume. The range of output or sales over which cost behavior patterns remain unchanged is called the relevant range.

Why is determination of a relevant range important quizlet? ›

Why is determination of a relevant range important? Cost behavior outside the relevant range may be distorted. vary in total directly and proportionately with changes in the activity level and remain the same per unit at every activity level.

Why is identification of a relevant range important quizlet? ›

Which of the following costs are variable? Why is identification of a relevant range important? It is a cost that is incurred by a company that must be accounted for. It directly impacts the number of units of product a customer buys.

Is relevant range a fixed cost? ›

Definition of Relevant Range

The term relevant range is included in the definition of fixed costs, because if a company's volume were to decline to an extremely low level, the company would take action to decrease its total amount of fixed costs.

What is fixed cost and variable cost in relevant range? ›

In a manufacturing process, there are different types of costs. One of those cost profiles is a variable cost that only increases if the quantity of output also increases. While a fixed cost remains the same over a relevant range, a variable cost usually changes with every incremental unit produced.

How is the relevant range of activity related to fixed and variable cost? ›

Variable costs vary in total based on the level of activity. If there is no activity the total cost is zero. Fixed costs do not change based on activity. The cost will stay the same in total as long as activity is within the relevant range.

Why are variable costs relevant? ›

Variable costs are hugely important to a business as it can have a major impact on how a company spends their money. Depending on the strategic goals of a business, variable costs can be quite high (in the case of a lot of change in a business) or quite low.

How do you calculate variable cost? ›

Variable Cost Formula. To calculate variable costs, multiply what it costs to make one unit of your product by the total number of products you've created. This formula looks like this: Total Variable Costs = Cost Per Unit x Total Number of Units.

How do you find variable cost per unit? ›

Calculate variable cost per unit. The variable cost per unit is the total variable expenses divided by the number of units. In the printer example, the variable cost per unit is $70,000 divided by 5,400. This means that it costs the printer $12.96 in variable costs per book.

How do you calculate unit cost of a product in accounting? ›

To find the unit cost, one would use the unit cost formula. The unit cost formula is: Cost per unit = variable cost + fixed costs / total units produced.

What is the formula for total cost? ›

A straightforward and easy-to-use procedure, the total-cost formula is calculated by dividing the total production cost by the number of products manufactured.

What is total cost of manufacturing cost? ›

What is Total Manufacturing Cost? Total manufacturing cost is the aggregate amount of cost incurred by a business on its production operations within a reporting period. It includes all possible costs incurred by the production function, including direct materials, direct labor, and factory overhead.

What do we call the normal range of production volume for a company? ›

In accounting, the term relevant range usually refers to a normal range of volume or normal amount of activity in which the total amount of a company's fixed costs will not change as the volume or amount of activity changes.

What is the relevant range of Perteet Corporation? ›

Perteet Corporation's relevant range of activity is 6,600 units to 13,000 units.

What is the range over which a company is expected to operate? ›

The range over which a company expects to operate during a year is called the relevant range of the activity index.

Why is relevant range important? ›

Why is relevant range important? Relevant range is important because if you make the assumption that all of your costs will remain constant, whether they are fixed or variable, you may make errors on your projections.

What is the concept of relevant range? ›

What is Relevant Range? The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.

What is Macy Corporation's relevant range of activity? ›

Macy Corporation's relevant range of activity is 4,000 units to 8,000 units.

What is Landmann Corporation's relevant range of activity? ›

Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units.

When the level of activity decreases within the relevant range? ›

Answer and Explanation: When the activity level is expected to decline within the relevant range, the fixed costs per unit would be expected to increase while variable costs per unit would remain the same.

What business range means? ›

Range defines the difference between the highest and lowest prices traded for a defined period, such as a day, month, or year. The range is marked on charts, for a single trading period, as the high and low points on a candlestick or bar.

What is the range of operations? ›

The operation range, which is given by a low concentration of the two components CO and NOx in the exhaust of a combustion system of fixed dimension, is generally characterised by the flame temperature range, which, in turn, is given by the thermodynamic conditions of the gas turbine.

How do you calculate operational range? ›

Operating range is calculated by dividing the usable energy within the battery pack by the operating efficiency of the vehicle.

What is Ouellette Corporation's relevant range of activity? ›

Question: Ouelette Corporation's relevant range of activity is 3,000 units to 7,000 units.

What is fixed manufacturing cost? ›

Fixed costs in manufacturing are a necessary component of the production process; they cover salaries, equipment, rent, and insurance and generally do not change within short time frames.

What is the formula for fixed manufacturing costs? ›

In some cases, businesses only list their total costs and variable costs per unit. You can use this information to determine your fixed costs with the formula: Fixed Cost = Total Cost – (Variable Cost Per Unit * Units Produced).

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