Question

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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 $ 6.00
Direct labor $ 3.50
Variable manufacturing overhead $ 1.50
Fixed manufacturing overhead $ 4.00
Fixed selling expense $ 3.00
Fixed administrative expense $ 2.00
Sales commissions $ 1.00
Variable administrative expense $ 0.50
Required:
1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

Note: Do not round intermediate calculations.

Answer 1

To find the total product costs for producing 10,000 units, add the following costs:

Direct Materials: $6.00 per unit * 10,000 units = $60,000

Direct Labor: $3.50 per unit * 10,000 units = $35,000

Variable Manufacturing Overhead: $1.50 per unit * 10,000 units = $15,000

Fixed Manufacturing Overhead: $4.00 per unit * 10,000 units = $40,000

Total Product Costs = $60,000 + $35,000 + $15,000 + $40,000 = $150,000.

So, the total product costs for 10,000 units are $150,000.

Explanation:

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