Kubin Company\'s relevant range of production is 28,000 to 31,500 units. When it

Question

Kubin Company's relevant range of production is 28,000 to 31,500 units. When it produces and sells 29,750 units, its average costs per unit are as follows Amount per Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense $ 8.80 $ 5.80 3.30 6.80 5.30 4.30 2.80 s 2.30 Required 1. What is the incremental manufacturing cost incurred if the company increases production from 29,750 to 29,751 units? 2. What is the incremental cost incurred if the company increases production and sales from 29,750 to 29,751 units? 3. Assume that Kubin Company produced 29,750 units and expects to sell 29,370 of them. If a new customer unexpectedly emerges and expresses interest in buying the 380 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 29,750 units and expects to sell 29,370 of them. If a new customer unexpectedly emerges and expresses interest in buying the 380 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?

Explanation / Answer

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Particulars Amount Direct Material 8.80 Direct labor 5.80 Variable manufacturing overhead 3.30 Total Incremental Cost $ 17.90

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