Kubin Company’s relevant range of production is 26,000 to 35,500 units. When it produces and sells 30,750 units, its average costs per unit are as follows:

 	Average Cost per Unit
Direct materials	$ 8.60
Direct labor	$ 5.60
Variable manufacturing overhead	$ 3.10
Fixed manufacturing overhead	$ 6.60
Fixed selling expense	$ 5.10
Fixed administrative expense	$ 4.10
Sales commissions	$ 2.60
Variable administrative expense	$ 2.10For financial accounting purposes, what is the total period cost incurred to sell 26,000 units?


To determine the total period cost incurred to sell 26,000 units, we first need to identify which of the costs listed are classified as "period costs." Period costs are expenses that are not directly tied to the production process, meaning they are expensed in the period in which they are incurred. These typically include fixed and variable selling expenses, and administrative expenses.

From the data provided:

1. **Fixed selling expense:** $5.10 per unit
2. **Fixed administrative expense:** $4.10 per unit
3. **Sales commissions (variable selling expense):** $2.60 per unit
4. **Variable administrative expense:** $2.10 per unit

Now, we'll calculate the total period cost for 26,000 units:

\[
\text{Total period cost} = (\text{Fixed selling expense} + \text{Fixed administrative expense} + \text{Sales commissions} + \text{Variable administrative expense}) \times \text{Number of units}
\]

\[
\text{Total period cost} = (5.10 + 4.10 + 2.60 + 2.10) \times 26,000
\]

\[
\text{Total period cost} = 13.90 \times 26,000
\]

\[
\text{Total period cost} = 361,400
\]

So, the total period cost incurred to sell 26,000 units is **$361,400**.

Would you like more details on this calculation or have any other questions?

Here are 5 related questions to consider:
1. How do period costs differ from product costs?
2. What impact do period costs have on the income statement?
3. How would a change in the number of units sold affect the total period costs?
4. Can period costs include any variable costs, or are they always fixed?
5. How do period costs influence the pricing strategy of a company?

**Tip:** Remember that period costs are expensed in the period in which they are incurred, unlike product costs, which are capitalized as inventory until the goods are sold.

Learn how to calculate the total period cost incurred by Kubin Company to sell 26,000 units based on fixed selling expenses, fixed administrative expenses, sales commissions, and variable administrative expenses. Detailed solution provided.

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