Kubin Companys relevant range of production is 27000 to 2900

Kubin Company\'s relevant range of production is 27,000 to 29,000 units. When it produces and sells 28,000 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 Amount per Unit $8.70 $5.70 $3.20 $6.70 $ 5.20 $ 4.20 $2.70 $2.20 ales commissions Variable administrative expense Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 28,000 to 28,001 units? 2. What is the incremental cost incurred if the company increases production and sales from 28,000 to 28,001 units? 3. Assume that Kubin Company produced 28,000 units and expects to sell 27,630 of them. If a new customer unexpectedly emerges and expresses interest in buying the 370 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 28,000 units and expects to sell 27,630 of them. If a new customer unexpectedly emerges and expresses interest in buying the 370 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? Complete this question by entering your answers in the tabs below

Solution

Requirement 1

Requirement 2

Requirement 3

Incremental Manufacturing Cost per unit will be same as calculated in Requirement 1 i.e. $ 17.6 per unit

Incremental Manufacturing Cost = 370 Units * Total Incremental Cost as calculated in Requirement 1

= 370 Units * $ 17.6

= $ 6512

Requirement 4

Direct Materials (A)	$ 8.70
Direct Labor (B)	$ 5.70
Variable Manufacturing Overheads (C)	$ 3.20
Total Incremental Cost (D = A+B+C)	$ 17.6