Kubin Company’s relevant range of production is 24,000 to 31,000units. When it produces and sells 27,500 units, its average costsper unit are as follows:
Amount per Unit Direct materials $ 8.40 Direct labor $ 5.40Variable manufacturing overhead $ 2.90 Fixed manufacturing overhead$ 6.40 Fixed selling expense $ 4.90 Fixed administrative expense $3.90 Sales commissions $ 2.40 Variable administrative expense $1.90
1. What is the incremental manufacturing cost incurred if thecompany increases production from 27,500 to 27,501 units? 2. Whatis the incremental cost incurred if the company increasesproduction and sales from 27,500 to 27,501 units? 3. Assume thatKubin Company produced 27,500 units and expects to sell 27,160 ofthem. If a new customer unexpectedly emerges and expresses interestin buying the 340 extra units that have been produced by thecompany and that would otherwise remain unsold, what is theincremental manufacturing cost per unit incurred to sell theseunits to the customer? 4. Assume that Kubin Company produced 27,500units and expects to sell 27,160 of them. If a new customerunexpectedly emerges and expresses interest in buying the 340 extraunits that have been produced by the company and that wouldotherwise remain unsold, what incremental selling andadministrative cost per unit is incurred to sell these units to thecustomer?
