Question

Exercise 1-10 Differential Costs and Sunk Costs [LO1-5] 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: Aver age Cost per Unit $ 8.10 $ 5.10 $ 2.60 $ 6.10 $ 4.60 $ 3.60 $ 2.10 $ 1.60 Direct naterials Direct labor Variable narufacturing overhead Fixed aanuf acturing overhead Fixed selling expense Fixed adninistrative expense Sales conniesions Variable adninistrative expense 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? Complete this question by entering your answers in the tabs below.

Answer 1

1.

Direct material	$8.10
Direct labor	5.10
Variable manufacturing overhead	2.60
Total incremental cost	$15.8

2.

Direct material	$8.10
Direct labor	5.10
Variable manufacturing overhead	2.60
Sales commission	2.10
Variable administrative expenses	1.60
Variable cost per unit sold	$19.5

3. Incremental manufacturing cost $0

4. Incremental selling and administrative cost per unit:

Sales commission	$2.10
Variable administrative expense	1.60
Variable cost per unit sold	$3.7