Score:
3.
100/100
Points
100
Award: 12.50 out of 12.50 points
%
You received credit for this question in a previous attempt
Exercise 1-10 Differential Costs and Sunk Costs [LO1-5]
Kubin Company’s relevant range of production is 15,000 to 19,000 units. When it produces and sells 17,000 units, its average costs per unit are as follows:
Amount per Unit
$ 7.60
$ 4.60
$ 2.10
$ 5.60
$ 4.10
$ 3.10
$ 1.60
$ 1.10
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Fixed selling expense
Fixed administrative expense
Sales commissions
Variable administrative expense
Required:
1. What is the incremental manufacturing cost incurred if the company increases production from 17,000 to 17,001 units?
2. What is the incremental cost incurred if the company increases production and sales from 17,000 to 17,001 units?
3. Assume that Kubin Company produced 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly emerges and expresses interest in buying the 260 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 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly emerges and expresses interest in buying the 260 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.
Required 1
Required 2
Required 3
Required 4
Assume that Kubin Company produced 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly
emerges and expresses interest in buying the 260 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?
Incremental manufacturing cost
$
0


Required 2
Required 4

Garrison 16e Rechecks 2017-09-18
References
Worksheet
Difficulty: 1 Easy
Exercise 1-10 Differential Costs and Sunk
Costs [LO1-5]
Learning Objective: 01-05 Understand cost classifications
used in making decisions: differential costs, sunk costs, and
opportunity costs.
Exercise 1-10 Differential Costs and Sunk Costs [LO1-5]
Kubin Company’s relevant range of production is 15,000 to 19,000 units. When it produces and sells 17,000 units, its average costs per unit are as follows:
Amount per Unit
$ 7.60
$ 4.60
$ 2.10
$ 5.60
$ 4.10
$ 3.10
$ 1.60
$ 1.10
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Fixed selling expense
Fixed administrative expense
Sales commissions
Variable administrative expense
Required:
1. What is the incremental manufacturing cost incurred if the company increases production from 17,000 to 17,001 units?
2. What is the incremental cost incurred if the company increases production and sales from 17,000 to 17,001 units?
3. Assume that Kubin Company produced 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly emerges and expresses interest in buying the 260 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 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly emerges and expresses interest in buying the 260 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.
Required 1
Required 2
Required 3
Required 4
Assume that Kubin Company produced 17,000 units and expects to sell 16,740 of them. If a new customer unexpectedly
emerges and expresses interest in buying the 260 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?
Incremental manufacturing cost
$
0

Required 2
Required 4

Garrison 16e Rechecks 2017-09-18
Explanation:
3.
Because the 260 units to be sold to the new customer have already been produced, the incremental manufacturing cost per unit is zero. The variable manufacturing costs incurred to make these units have already been incurred and, as such, are sunk costs.