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Kesterson Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $...

Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period
Direct materials $ 7.20
Direct labor $ 4.30
Variable manufacturing overhead $ 1.60
Fixed manufacturing overhead $ 21,000
Sales commissions $ 2.20
Variable administrative expense $ 0.50
Fixed selling and administrative expense $ 6,000

The incremental manufacturing cost that the company will incur if it increases production from 7,500 to 7,501 units is closest to:

Multiple Choice:

A. $13.10

B. $15.90

C. $19.40

D. $16.40

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Answer #1

Answer: A.$13.10

Explanations:

No Change in total fixed cost due to change in production units. So, need to calculated variable costs only.

Direct materials $7.20
Direct labor $4.30
Variable manufacturing overhead $1.60
Total Variable cost per unit $13.10

Thus, The incremental manufacturing cost that the company will incur if it increases production from 7,500 to 7,501 units is closest to $13.10

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