Question

Kubin Company’s relevant range of production is 27,000 to 29,000 units. When it produces and sells 28,000 units, its average costs per unit are as follows:

  

	Amount per Unit
Direct materials	$	8.70
Direct labor	$	5.70
Variable manufacturing overhead	$	3.20
Fixed manufacturing overhead	$	6.70
Fixed selling expense	$	5.20
Fixed administrative expense	$	4.20
Sales commissions	$	2.70
Variable administrative expense	$	2.20

1. What is the incremental manufacturing cost incurred if the company increases production from 28,000 to 28,001 units?

2. What is the incremental cost incurred if the company increases production and sales from 28,000 to 28,001 units?

3. Assume that Kubin Company produced 28,000 units and expects to sell 27,630 of them. If a new customer unexpectedly emerges and expresses interest in buying the 370 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 28,000 units and expects to sell 27,630 of them. If a new customer unexpectedly emerges and expresses interest in buying the 370 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?

req 1

Direct materials
Direct labor
Variable manufacturing overhead
Total incremental cost	$0.00

req.2
Direct materials
Direct labor
Variable manufacturing overhead
Sales commissions
Variable administrative expense
Variable cost per unit sold	$0.00

req. 3

Incremental manufacturing cost

req.4

Sales commission
Variable administrative expense
Variable cost per unit sold	$0.00

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.