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Exercise 1-10 Differential Costs and Sunk Costs [LO1-5] 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 $8.70 5.70 $ 3.20 $ 6.70 $ 5.20 $ 4.20 2.70 2.20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Required: 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? Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 4 Required 1 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? Incremental manufacturing cost KRequired 2 Required 4

Answer 1

1
Direct materials	8.70
Direct labor	5.70
Variable manufacturing overhead	3.20
Total incremental cost	17.60
2
Direct materials	8.70
Direct labor	5.70
Variable manufacturing overhead	3.20
Sales commissions	2.70
Variable administrative expense	2.20
Variable cost per unit sold	22.50
3
Incremental manufacturing cost	0
4
Sales commissions	2.70
Variable administrative expense	2.20
Variable cost per unit sold	4.90