Question

Kubin Company’s relevant range of production is 12,000 to 16,000 units. When it produces and sells 14,000 units, its average costs per unit are as follows:

Amount per UnitDirect materials$7.30Direct labor$4.30Variable manufacturing overhead$1.80Fixed manufacturing overhead$5.30Fixed selling expense$3.80Fixed administrative expense$2.80Sales commissions$1.30Variable administrative expense$0.80

Required:

1. What is the incremental manufacturing cost incurred if the company increases production from 14,000 to 14,001 units?

2. What is the incremental cost incurred if the company increases production and sales from 14,000 to 14,001 units?

3. Assume that Kubin Company produced 14,000 units and expects to sell 13,770 of them. If a new customer unexpectedly emerges and expresses interest in buying the 230 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 14,000 units and expects to sell 13,770 of them. If a new customer unexpectedly emerges and expresses interest in buying the 230 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?

What is the incremental manufacturing cost incurred if the company increases production from 14,000 to 14,001 units? (Round your answers to 2 decimal places.)

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

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

Assume that Kubin Company produced 14,000 units and expects to sell 13,770 of them. If a new customer unexpectedly emerges and expresses interest in buying the 230 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?

	Incremental manufacturing cost

Assume that Kubin Company produced 14,000 units and expects to sell 13,770 of them. If a new customer unexpectedly emerges and expresses interest in buying the 230 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? (Round your answers to 2 decimal places.)

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

Answer 1

1.

Direct material	$7.30
Direct labor	4.30
Variable manufacturing overhead	1.80
Total incremental manufacturing cost	$13.4

2.

Direct material	$7.30
Direct labor	4.30
Variable manufacturing overhead	1.80
Sales commission	1.30
Variable administrative expense	0.80
Variable cost per unit sold	$15.5

3.

Incremental manufacturing cost per unit = $0 (As already have been produced by the company)

4.

Sales commission	1.30
Variable administrative expense	0.80
Variable cost per unit sold	$15.5