Kubin Companys relevant range of production is 10,000 to 12,000 units. When it produces and sells 11,000
Question:
Kubin Company’s relevant range of production is 10,000 to 12,000 units. When it produces and sells 11,000 units, its average costs per unit are as follows:
Amount per Unit Direct materials $ 7.10
Direct labor $ 4.10
Variable manufacturing overhead $ 1.60
Fixed manufacturing overhead $ 5.10
Fixed selling expense $ 3.60
Fixed administrative expense $ 2.60
Sales commissions $ 1.10
Variable administrative expense $ 0.60
Required:
1. What is the incremental manufacturing cost incurred if the company increases production from 11,000 to 11,001 units?
2. What is the incremental cost incurred if the company increases production and sales from 11,000 to 11,001 units?
3. Assume that Kubin Company produced 11,000 units and expects to sell 10,790 of them. If a new customer unexpectedly emerges and expresses interest in buying the 210 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 11,000 units and expects to sell 10,790 of them. If a new customer unexpectedly emerges and expresses interest in buying the 210 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?
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones