Answer:
a)Variable cost= $14u
b)Variable cost=$14u
c) Total variable cost= $252000
d) Total variable cost= $308000
e) Fixed cost per unit= $12,22
f) Fixed cost per unit= $10
g) Total fixed manufacturing overhead= $100000
h) Total fixed manufacturing overhead= $100000
Explanation:
The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain expense levels can be expected to maintain. Outside of that relevant range, expenses will likely differ from the expected amount.
The range of production is between 18000 and 22000 units. In this range, variable and fixed costs will likely maintain.
We know that at 20000 units the variable and fixed costs are:
Variable:
Direct materials $ 7.00 unit
Direct labor $ 4.00 unit
Variable manufacturing overhead $ 1.50 unit
Sales commissions $ 1.00 unit
Variable administrative expense $ 0.50 unit
Total variable cost= $14u
Fixed costs:
Fixed manufacturing overhead $ 5.00*20000u=$10000
Fixed selling expense $ 3.50*20000u=$70000
Fixed administrative expense $ 2.50*20000u=$50000
Total fixed cost= $220000
a)Q=18000 (it is in the range)
Variable cost= $14u
b)Q=22000 (it is in the range)
Variable cost=$14u
c) Q=18000
Total variable cost= QxCv=18000*14=$252000
d)Q=22000
Total variable cost= QxCv=22000*14=$308000
e) Q=18000
Fixed cost per unit=total fixed cost/Q= 220000/18000=$12,22
f)Q=22000
Fixed cost per unit=total fixed cost/Q= 220000/22000=$10
g) Q=18000
Total fixed manufacturing overhead= $100000 (it doesn't change with production between range)
h) Q=22000
Total fixed manufacturing overhead= $100000 (it doesn't change with production between range)
