Kubin Company's relevant range of production is 25,000 to 33,500 units. When it produces and sells 29,250 units, itsaverage costs per unit are as follows:AverageCost perUnit$ 8.50$ 5.50$ 3.00$ 6.50$ 5.00$ 4.00$ 2.50$ 2.00Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadFixed selling expenseFixed administrative expenseSales commissionsVariable administrative expenseRequired:1. What is the incremental manufacturing cost incurred if the company increases production from 29,250 to 29,251 units?2. What is the incremental cost incurred if the company increases production and sales from 29,250 to 29,251 units?3. Assume that Kubin Company produced 29,250 units and expects to sell 28,900 of them. If a new customer unexpectedly emergesand expresses interest in buying the 350 extra units that have been produced by the company and that would otherwise remainunsold, what is the incremental manufacturing cost per unit incurred to sell these units to the customer?4. Assume that Kubin Company produced 29,250 units and expects to sell 28,900 of them. If a new customer unexpectedly emergesand expresses interest in buying the 350 extra units that have been produced by the company and that would otherwise remainunsold, what incremental selling and administrative cost per unit is incurred to sell these units to the customer?

Incremental manufacturing cost is the extra cost incurred to manufacture one additional unit .…

Average Cost per Unit rect materials rect labor iable manufacturing overhead ed manufacturing overhead ed selling expense ced administrative expense Les commissions -iable administrative expense $ 8.50 $ 5.50 $ 3.00 $ 6.50 $ 5.00 $ 4.00 $ 2.50 $ 2.00

Average Cost per Unit rect materials rect labor iable manufacturing overhead ed manufacturing overhead ed selling expense ced administrative expense Les commissions -iable administrative expense $ 8.50 $ 5.50 $ 3.00 $ 6.50 $ 5.00 $ 4.00 $ 2.50 $ 2.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

100%

Kubin Company's relevant range of production is 25,000 to 33,500 units. When it produces and sells 29,250 units, its
average costs per unit are as follows:
Average
Cost per
Unit
$ 8.50
$ 5.50
$ 3.00
$ 6.50
$ 5.00
$ 4.00
$ 2.50
$ 2.00
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 29,250 to 29,251 units?
2. What is the incremental cost incurred if the company increases production and sales from 29,250 to 29,251 units?
3. Assume that Kubin Company produced 29,250 units and expects to sell 28,900 of them. If a new customer unexpectedly emerges
and expresses interest in buying the 350 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 29,250 units and expects to sell 28,900 of them. If a new customer unexpectedly emerges
and expresses interest in buying the 350 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?

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