Dozier Company produced and sold 1000 units during its first

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:

Direct materials $ 88,000 Direct labor $ 44,500 Variable manufacturing overhead $ 22,600 Fixed manufacturing overhead 33,700 Total manufacturing overhead $ 56,300 Variable selling expense $ 15,800 Fixed selling expense 25,600 Total selling expense $ 41,400 Variable administrative expense $ 5,900 Fixed administrative expense 28,800 Total administrative expense $ 34,700

With respect to cost classifications for decision making:

1. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?

Solution

Incremental Manufacturing Cost To Manufacture Additional Unit Direct Material - $88,000 X 1/1000         88.00 Direct Labor - $44,500 X 1/1000         44.50 Variable Manufacturing Overhead - $22,600 X 1/1000         22.60 Total Incremental Manufacturing Costs      155.10