Question

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Kubin Company's relevant range of production is 16,000 to 24,500 units. When it produces and sells 20,250 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Amount per Unit $ 7.70 $ 4.70 $ 2.20 $ 5.70 $ 4.20 $ 3.20 $ 1.70 $ 1.20 Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 20,250 to 20,251 units? 2. What is the incremental cost incurred if the company increases production and sales from 20,250 to 20,251 units? 3. Assume that Kubin Company produced 20,250 units and expects to sell 19,980 of them. If a new customer unexpectedly emerges and expresses interest in buying the 270 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 20,250 units and expects to sell 19,980 of them. If a new customer unexpectedly emerges and expresses interest in buying the 270 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that Kubin Company produced 20,250 units and expects to sell 19,980 of them. If a new customer unexpectedly emerges and expresses interest in buying the 270 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.) Show less Sales commission Variable administrative expense Variable cost per unit sold $ 0.00

Answer 1

Required 1
Incremental Manufacturing Cost
Particulars	Cost
	20250 Units	20251 Units
Direct Material	155925.00	155932.70
Direct Labour	95175.00	95179.70
Variable Manufacturing Overhead	44550.00	44552.20
Fixed Manufacturing Overhead	115425.00	115425.00
Total	411075.00	411089.60
Incremental Cost		14.60
Required 2
Incremental Cost If Production and Sales Increased from 20250 to 20251
Particulars	Cost
	20250 Units	20251 Units
Direct Material	155925.00	155932.70
Direct Labour	95175.00	95179.70
Variable Manufacturing Overhead	44550.00	44552.20
Fixed Manufacturing Overhead	115425.00	115425.00
Fixed Selling Expenses	85050.00	85050.00
Fixed Administration Overhead	64800.00	64800.00
Variable Administration Overhead	24300.00	24301.20
Sales Commission	34425.00	34426.70
Total	619650.00	619667.50
Incremental Cost		17.50
Required 3
Incremental Cost of Manufacturing
Particulars	Cost
	Manufacture 20250 Units and 19980 Sold	Manufacture 20250 Units and 20250 Sold
Direct Material	155925.00	155925.00
Direct Labour	95175.00	95175.00
Variable Manufacturing Overhead	44550.00	44550.00
Fixed Manufacturing Overhead	115425.00	115425.00
Total	411075.00	411075.00
Incremental Cost		0.00
Required 4
Incremental Cost of Selling and Administration
Particulars	Cost
	Manufacture 20250 Units and 19980 Sold	Manufacture 20250 Units and 20250 Sold
Sales Commission	33966	34425
Variable Administrative Overhead	23976	24300
Total	57942.00	58725.00
Incremental Cost		2.90