Question

Fiori Corporation's relevant range of activity is 4,500 units to 8,500 units. When it produces and sells 6,500 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 Average Cost per Unit $ 6.90 $ 3.50 $ 1.95 $ 3.60 $ 1.25 $ 1.15 $ 1.80 $ 1.30 The incremental manufacturing cost that the company will incur if it increases production from 7,500 to 7,501 units is closest to:

Answer 1

12.35 is the answer

Answer 2

Your required answer is option B i.e. $12.35

Explanation:

Direct Materials Direct Labor Variable Manufacturing overhead Fixed Manufacturing Overhead Manufacturing Cost Incremental Manufacturing Cost (7501 Units- 7500 Units) Cost Per 6500 Units 7500 Units 7501 Units Unit $6.90 $44,850.00 $51,750.00 $51,756.90 $3.50 $22,750.00 $26,250.00 $26,253.50 $1.95 $12,675.00 $14,625.00 $14,626.95 $3.60 $23,400.00 $23,400.00 $23,400.00 $103,675.00 $116,025.00 $116,037.35 $12.35

Note: Fixed selling, Fixed administrative, sales commission and variable administrative cost is not part of Manufacturing cost therefore not included

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