Rose company has a relevant range of production between 9000...

Rose Company has a relevant range of production between 9,000 and 25,000 units. The following cost data represents average cost per unit for 15,000 units of production. Average Costper Unit Direct Materials $13 Direct Labor 9 Indirect Materials 2 Fixed manufacturing overhead 5 Variable manufacturing overhead 2 Fixed selling and administrative expenses 8 Variable sales commissions 25 Using the cost data from Rose Company, answer the following questions: A. If 9,000 units are produced, what is the variable cost per unit? Variable cost per unit B. If 18,000 units are produced, what is the variable cost per unit? Variable cost per unit C. If 22,000 units are produced, what are the total variable costs? Total variable costs D. If 12,000 units are produced, what are the total variable costs? Total variable costs E. If 20,000 units are produced, what are the total manufacturing overhead costs incurred? Total manufacturing overhead costs F. If 23,000 units are produced, what are the total manufacturing overhead costs incurred? Total manufacturing overhead costs G. If 20,000 units are produced, what are the per unit manufacturing overhead costs incurred? If required, round final answer to two decimal places. Manufacturing overhead costs per unit H. If 25,000 units are produced, what are the per unit manufacturing overhead costs incurred? If required, round final answer to two decimal places. Manufacturing overhead costs per unit

Transcript

00:01 Here we're given information about rose company and we're asked several questions about them, or about various situations about them specifically.

00:11 We're going to start by figuring out the variable cost per unit and the fixed cost per unit.

00:16 So starting with the variable costs, here we have direct materials at $12 per unit, direct labor at 10 indirect materials are two variable manufacturing overhead is three and variable sales commission is 25 so the total variable cost per unit is all of these numbers added together 12 plus 10 plus 2 plus 3 plus 25 for a total of 52 dollars per unit now remember variable costs are things that in order for that cost to exist, we have to be making things.

01:55 If they don't make any product, then they're not charged these fees.

02:00 That cost doesn't exist, whereas fixed costs occur regardless of how many units you make.

02:07 Fixed costs are things that even if you make zero unit, you're still going to incur that cost.

02:14 So let's look at our fixed costs.

02:20 And for our fixed costs, we have fixed manufacturing overhead at $4 .4 .4.

02:33 And fixed selling an admin expense at 8.

02:52 So my fixed cost per unit is 12.

03:13 So the total fixed cost, based on the information they gave us, is 15 ,000 units times 12 for a total of $180 ,000.

03:33 Now, this is going to allow me to know what my fixed cost would be given other units.

03:41 And the reason is because if i'm spreading this over a different number, i'm going to get a different number than 12.

03:47 And let's take a look at what that means.

03:49 But let's start with part a.

03:54 So part a asked, what would our variable cost per unit be if 10 ,000 units are produced? well, variable cost remains the same.

04:07 So variable cost per unit remains the same regardless of how many units are produced.

04:39 Therefore, variable cost per unit is $52 per unit.

04:50 Part b, which asks, what about if 18 ,000 units are produced? what is the variable cost per unit? well, again, as we said in part a, variable cost per unit remains the same regardless of how many units are produced.

05:08 Therefore, the variable cost is still going to be $52 per unit.

05:16 So if 21 ,000 units are produced, so part c, what is our total variable cost? well, we're going to take the 21 ,000 units, multiply that by the $52 per unit, and we find that the total variable cost is $1 ,092 ,000.

05:49 Part d, what about if 11 ,000 units are produced? what is our variable cost? well we would take 11 ,000 times 52 and when i do that i get $572 ,000 and we can see now that the less units that are produced, the less amount of money in my variable costs i am incurring.

06:19 Part e, we're going to figure out the total manufacturing overhead at 15 ,000 units or 19 ,000 units, sorry.

06:31 So part e, i get direct materials, 19 ,000 times 12 for 228 ,000.

06:48 Direct labor, 19 ,000 times 10.

06:57 Remember these 12 and 10, that's coming from that very first part table that we did at the beginning.

07:02 For 190 ,000 in direct materials, 19 ,000 times 2 for 38 ,000.

07:19 Variable manufacturing overhead.

07:22 We're going to abbreviate this variable manufacturing overhead, 19 ,000 times three for 57 ,000.

07:34 Fixed manufacturing overhead, 15 ,000 times four, because this never goes, changes.

07:46 It's fixed for 60 ,000...

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