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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
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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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?
Transcribed Image Text: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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