Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.00 Direct labor $ 4.00 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 5.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.50 Sales commissions $ 1.00 Variable administrative expense $ 0.50 Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 20,000 to 20,001 units?
Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.00 Direct labor $ 4.00 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 5.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.50 Sales commissions $ 1.00 Variable administrative expense $ 0.50 Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 20,000 to 20,001 units?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:
| Average Cost per Unit | ||
| Direct materials | $ | 7.00 |
| Direct labor | $ | 4.00 |
| Variable manufacturing |
$ | 1.50 |
| Fixed manufacturing overhead | $ | 5.00 |
| Fixed selling expense | $ | 3.50 |
| Fixed administrative expense | $ | 2.50 |
| Sales commissions | $ | 1.00 |
| Variable administrative expense | $ | 0.50 |
Required:
1. What is the incremental
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