Question

Martinez Company's relevant range of production is 7,500 units to 12,500 units. When It produces and sells 10,000 unlts, its average costs per unit are as follows Average Cost Per Unit $6.10 $ 3.60 $1.40 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense 4.00 $3.16 $ 2.10 $ 1.10 $0.55 Foundational 1-15 15, What incrementol manufacturing cost wll Mortinez incur if t Increases production from 10.000 10,001 units? (Round your answer to 2 decimal places.) Incremental cost per unit produced

Answer 1

If the production is increased from 10,000 units to 10,001 units, then for that 1 unit only the variable manufacturing cost will be required as the production of 10,001 units is within the production capacity of the company and hence no additional fixed cost will be required for it.

	Per unit
Direct material	$6.10
Direct labor	$3.60
Variable manufacturing overhead	$1.40
Variable manufacturing cost	$11.10

So, the Incremental cost per unit produced = $11.10