Question

Fiori Corporation's relevant range of activity is 2,500 units to 5,500 units. When it produces and sells 4,000 units, its average costs per unit are as follows:

Average Cost per Unit Direct materials $ 6.60 Direct labor $ 2.90 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.90 Fixed selling expense $ 0.95 Fixed administrative expense $ 0.85 Sales commissions $ 1.55 Variable administrative expense $ 1.05 The incremental manufacturing cost that the company will incur if it increases production from 4,500 to 4,501 units is closest to:

Multiple Choice $18.45 $11.15 $14.05 $15.00

Answer 1

Incremental manufacturing cost includes variable manufacturing cost .The cost information of variable manufacturing expenses is as follows

Particulars	Amount
Direct Material	6.60
Direct Labour	2.90
Variable Manufacturing Overhead	1.65
Total	11.15