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Required information Cost Classifications (Algo) Skip to question [ The following information applies to the questions displayed below. ] Kubin Companys relevant range of production

Required information

Cost Classifications (Algo)

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[The following information applies to the questions displayed below.]

Kubin Companys relevant range of production is 15,000 to 19,000 units. When it produces and sells 17,000 units, its average costs per unit are as follows:

Average Cost per Unit
Direct materials $ 7.60
Direct labor $ 4.60
Variable manufacturing overhead $ 2.10
Fixed manufacturing overhead $ 5.60
Fixed selling expense $ 4.10
Fixed administrative expense $ 3.10
Sales commissions $ 1.60
Variable administrative expense $ 1.10

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 17,000 to 17,001 units?
  2. What is the incremental cost incurred if the company increases productionandsales from 17,000 to 17,001 units?
  3. Assume Kubin Company produced 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly emerges and expresses interest in buying the 260 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 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly emerges and expresses interest in buying the 260 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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