Question

Bellucci Corporation has provided the following information:

	Cost per Unit		Cost per Period
Direct materials	$	7.20
Direct labor	$	4.50
Variable manufacturing overhead	$	1.25
Fixed manufacturing overhead			$	120,650
Sales commissions	$	1.30
Variable administrative expense	$	0.55
Fixed selling and administrative expense			$	44,650

The incremental manufacturing cost that the company will incur if it increases production from 9,500 to 9,501 units is closest to (assume that the increase is within the relevant range):

Answer 1

Answer

--Incremental manufacturing cost if production increases by 1 unit (from 9500 to 9501) will be EQUAL to the Variable manufacturing cost per unit.

--Variable manufacturing cost per unit = $ 7.20 + $ 4.50 + $ 1.25 = $ 12.95

--Correct Answer = $ 12.95 incremental manufacturing cost.