Kubin Company's relevant range of production is 21,000 to 25,000 units. When it produces and sells 23,000 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 $ 8.10 $ 5.10 $ 2.60 $6.10 $4.60 $ 3.60 $ 2.10 $ 1.60 Exercise 1-10 (Algo) Differential Costs and Sunk Costs [LO1-5] Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 23,000 to 23,001 units? 2. What is the incremental cost incurred if the company increases production and sales from 23,000 to 23,001 units? 3. Assume that Kubin Company produced 23,000 units and expects to sell 22,690 of them. If a new customer unexpectedly emerges and expresses interest in buying the 310 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 23,000 units and expects to sell 22,690 of them. If a new customer unexpectedly emerges and expresses interest in buying the 310 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Kubin Company's relevant range of production is 21,000 to 25,000 units. When it produces and sells 23,000 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
$ 8.10
$ 5.10
$ 2.60
$ 6.10
$ 4.60
$ 3.60
$ 2.10
$ 1.60
Exercise 1-10 (Algo) Differential Costs and Sunk Costs [LO1-5)
Required:
1. What is the incremental manufacturing cost incurred if the company increases production from 23,000 to 23,001 units?
2. What is the incremental cost incurred if the company increases production and sales from 23,000 to 23,001 units?
3. Assume that Kubin Company produced 23,000 units and expects to sell 22,690 of them. a new customer unexpectedly emerges
and expresses interest in buying the 310 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 23,000 units and expects to sell 22,690 of them. a new customer unexpectedly emerges
and expresses interest in buying the 310 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 21,000 to 25,000 units. When it produces and sells 23,000 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 $ 8.10 $ 5.10 $ 2.60 $ 6.10 $ 4.60 $ 3.60 $ 2.10 $ 1.60 Exercise 1-10 (Algo) Differential Costs and Sunk Costs [LO1-5) Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 23,000 to 23,001 units? 2. What is the incremental cost incurred if the company increases production and sales from 23,000 to 23,001 units? 3. Assume that Kubin Company produced 23,000 units and expects to sell 22,690 of them. a new customer unexpectedly emerges and expresses interest in buying the 310 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 23,000 units and expects to sell 22,690 of them. a new customer unexpectedly emerges and expresses interest in buying the 310 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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