Bellucci Corporation has provided the following information:

	Cost per Unit		Cost per Period
Direct materials	$	7.30
Direct labor	$	3.45
Variable manufacturing overhead	$	1.35
Fixed manufacturing overhead			$	103,200
Sales commissions	$	1.10
Variable administrative expense	$	0.65
Fixed selling and administrative expense			$	38,400

The incremental manufacturing cost that the company will incur if it increases production from 8,000 to 8,001 units is closest to (assume that the increase is within the relevant range):

Multiple Choice

• $28.45

• $12.10

• $31.55

• $25.00

Question 2

An income statement for Sam's Bookstore for the first quarter of the year is presented below:

Sam's Bookstore
Income Statement
For Quarter Ended March 31
Sales			$	950,000
Cost of goods sold				650,000
Gross margin				300,000
Selling and administrative expenses
Selling	$	104,000
Administration		112,000		216,000
Net operating income			$	84,000

On average, a book sells for $50. Variable selling expenses are $4 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed.

The cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

Multiple Choice

• Y = $112,500 + $4.00X

• Y = $112,500 + $5.50X

• Y = $111,500 + $5.50X

• Y = $111,500 + $7.00X