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Kubin Companys relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as

Kubin Companys relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows:

Average Cost per UnitDirect materials$ 8.00Direct labor$ 5.00Variable manufacturing overhead$ 2.50Fixed manufacturing overhead$ 6.00Fixed selling expense$ 4.50Fixed administrative expense$ 3.50Sales commissions$ 2.00Variable administrative expense$ 1.50

Exercise 1-10 (Algo) Differential Costs and Sunk Costs [LO1-5]

Required:

  1. What is the incremental manufacturing cost incurred if the company increases production from 21,500 to 21,501 units?
  2. What is the incremental cost incurred if the company increases productionandsales from 21,500 to 21,501 units?
  3. Assume Kubin Company produced 21,500 units and expects to sell 21,200 of them. If a new customer unexpectedly emerges and expresses interest in buying the 300 extra units that have been produced by the company and would otherwise remain unsold, what is the incremental manufacturing cost per unit incurred to sell these units to the customer?
  4. Assume Kubin Company produced 21,500 units and expects to sell 21,200 of them. If a new customer unexpectedly emerges and expresses interest in buying the 300 extra units that have been produced by the company and would otherwise remain unsold, what incremental selling and administrative cost per unit is incurred to sell these units to the customer?

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