Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:
Average Cost per UnitDirect materials$ 7.00Direct labor$ 4.00Variable manufacturing overhead$ 1.50Fixed manufacturing overhead$ 5.00Fixed selling expense$ 3.50Fixed administrative expense$ 2.50Sales commissions$ 1.00Variable administrative expense$ 0.50
Exercise 1-10 (Static) Differential Costs and Sunk Costs [LO1-5]
Required:
What is the incremental manufacturing cost incurred if the company increases production from 20,000 to 20,001 units?
What is the incremental cost incurred if the company increases production and sales from 20,000 to 20,001 units?
Assume that Kubin Company produced 20,000 units and expects to sell 19,800 of them. If a new customer unexpectedly emerges and expresses interest in buying the 200 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?
Assume that Kubin Company produced 20,000 units and expects to sell 19,800 of them. If a new customer unexpectedly emerges and expresses interest in buying the 200 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?