Question
Kubin Companys relevant range of production is 30,000 to 35,000 units. When it produces and sells 32,500 units, its average costs per unit are as
Kubin Companys relevant range of production is 30,000 to 35,000 units. When it produces and sells 32,500 units, its average costs per unit are as follows:
Amount per Unit | ||
Direct materials | $ | 9.00 |
Direct labor | $ | 6.00 |
Variable manufacturing overhead | $ | 3.50 |
Fixed manufacturing overhead | $ | 7.00 |
Fixed selling expense | $ | 5.50 |
Fixed administrative expense | $ | 4.50 |
Sales commissions | $ | 3.00 |
Variable administrative expense | $ | 2.50 |
Required:
1. What is the incremental manufacturing cost incurred if the company increases production from 32,500 to 32,501 units?
2. What is the incremental cost incurred if the company increases production and sales from 32,500 to 32,501 units?
3. Assume that Kubin Company produced 32,500 units and expects to sell 32,100 of them. If a new customer unexpectedly emerges and expresses interest in buying the 400 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 32,500 units and expects to sell 32,100 of them. If a new customer unexpectedly emerges and expresses interest in buying the 400 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?
What is the incremental manufacturing cost incurred if the company increases production from 32,500 to 32,501 units? (Round your answers to 2 decimal places.) Direct materials Direct labor Variable manufacturing overhead Total incremental costStep by Step Solution
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