Myklebust Corporation's Relevant Range of Activity Is 4,000 Units to 8,000

question 216

Essay

Myklebust Corporation's relevant range of activity is 4,000 units to 8,000 units.When it produces and sells 6,000 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 6,000 units?
b.For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units?
c.If the selling price is $20.20 per unit, what is the contribution margin per unit sold?
d.If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred?
e.If 7,000 units are produced, what is the total amount of indirect manufacturing cost incurred?
f.What incremental manufacturing cost will the company incur if it increases production from 6,000 to 6,001 units?

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Definitions:

Bank Charges

Bank charges are fees imposed by banks for various services, including account maintenance, transactions, overdrafts, and loan management.

Treasury Bills

Short-term government securities issued at a discount from the face value and mature in a year or less, representing a secure, low-risk investment.

Net Present Value

A valuation method that calculates the present value of expected future cash flows minus initial investment, used to assess investment opportunities.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, under which the payments are directed to a special post office box instead of the company’s corporate address.