Question
Exercise 1-10 Differential Costs and Sunk Costs [LO1-5] Kubin Company's relevant range of production is 10,000 to 12,000 units. When it produces and sells 11,000
Exercise 1-10 Differential Costs and Sunk Costs [LO1-5]
Kubin Company's relevant range of production is 10,000 to 12,000 units. When it produces and sells 11,000 units, its average costs per unit are as follows:
Amount per UnitDirect materials$7.10Direct labor$4.10Variable manufacturing overhead$1.60Fixed manufacturing overhead$5.10Fixed selling expense$3.60Fixed administrative expense$2.60Sales commissions$1.10Variable administrative expense$0.60
Required:
1. What is the incremental manufacturing cost incurred if the company increases production from 11,000 to 11,001 units?
2. What is the incremental cost incurred if the company increases productionandsales from 11,000 to 11,001 units?
3. Assume that Kubin Company produced 11,000 units and expects to sell 10,790 of them. If a new customer unexpectedly emerges and expresses interest in buying the 210 extra units that have been produced by the company and that would otherwise remain unsold, what is the incremental manufacturing cost per unit incurred to sell these units to the customer?
4. Assume that Kubin Company produced 11,000 units and expects to sell 10,790 of them. If a new customer unexpectedly emerges and expresses interest in buying the 210 extra units that have been produced by the company and that would otherwise remain unsold, what incremental selling and administrative cost per unit is incurred to sell these units to the customer?
for number 1-
Direct materials-
Direct labor-
Variable manufacturing overhead-
Total incremental cost-
for number 2 -
Direct materials-
Direct labor-
Variable manufacturing overhead-
Sales commissions-
Variable administrative expense-
Variable cost per unit sold-
for number 3-
Incremental manufacturing cost-
for number 4-
Sales commission-
Variable administrative expense-
Variable cost per unit sold - $
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