Asked by Matthew Castanon on May 11, 2024
Verified
Parlavecchio Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:
Required:a. For financial reporting purposes, what is the total amount of product costs incurred to make 4,000 units?b. For financial reporting purposes, what is the total amount of period costs incurred to sell 4,000 units?c. If 5,000 units are sold, what is the variable cost per unit sold?d. If 5,000 units are sold, what is the total amount of variable costs related to the units sold?e. If 5,000 units are produced, what is the average fixed manufacturing cost per unit produced?f. If 5,000 units are produced, what is the total amount of fixed manufacturing cost incurred?g. If 5,000 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis?
Variable Costs
Expenses that change in proportion to the activity of a business, such as costs for raw materials or production expenses, in contrast to fixed costs.
Fixed Manufacturing Cost
Expenses that do not change with the level of production, such as rent for factory premises, salaries for permanent staff, and depreciation of equipment.
Manufacturing Overhead Cost
Expenses related to the production process that are not directly tied to a specific product, including utilities, depreciation, and salaries for production supervisors.
- Acquire knowledge on the significance of the appropriate range of activity and how it affects cost implications.
- Pinpoint and assess the direct and indirect costs incurred in manufacturing activities.
- Calculate variable and fixed costs at different activity levels.
Verified Answer
MG
Mehdi GhaniMay 13, 2024
Final Answer :
a.
b.
c.
d.
e.
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 units.
f.
g.
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 units.
b. c. d. e. *The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 units.f.
g. *The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 4,000 units.
Learning Objectives
- Acquire knowledge on the significance of the appropriate range of activity and how it affects cost implications.
- Pinpoint and assess the direct and indirect costs incurred in manufacturing activities.
- Calculate variable and fixed costs at different activity levels.