Reference no: EM132547582

Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:

Amount per Unit

Direct materials $7.00

Direct labor $4.00

Variable manufacturing overhead $1.50

Fixed manufacturing overhead $5.00

Fixed selling expense $3.50

Fixed administrative expense $2.50

Sales commissions $1.00

Variable administrative expense $0.50

Required:

Question 1. What is the incremental manufacturing cost incurred if the company increases production from 20,000 to 20,001 units?

Question 2. What is the incremental cost incurred if the company increases production and sales from 20,000 to 20,001 units?

Question 3. Assume that Kubin Company produced 20,000 units and expects to sell 19,800 of them. If a new customer unexpectedly emerges and expresses interest in buying the 200 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?

Question 4. Assume that Kubin Company produced 20,000 units and expects to sell 19,800 of them. If a new customer unexpectedly emerges and expresses interest in buying the 200 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?

A. Direct materials

Direct labor

Variable manufacturing overhead

Total incremental cost

B. Direct materials

Direct labor

Variable manufacturing overhead

Sales commissions

Variable administrative expense

Variable cost per unit sold

C. Incremental manufacturing cost

D. Sales commission

Variable administrative expense

Variable cost per unit sold