Required information [The following information applies to the questions displayed below.] 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: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $7.00 $ 4.00 $ 1.50 $5.00 $3.50 $2.50 $1.00 $ 0.50
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Required information
[The following information applies to the questions displayed below.]
Mc
Graw
Hill
1
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:
A
option
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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 20,000 to 20,001 units?
2. What is the incremental cost incurred if the company increases production and sales from 20,000 to 20,001 units?
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?
Z
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?
Required 1
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$7.00
$ 4.00
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$1.50
$5.00
$ 3.50
$2.50
$ 1.00
$0.50
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The incremental manufacturing costs are the variable manufacturing costs incurred for additional units produced.
The unit variable costs are to be incurred as incremental cost but fixed costs are not incurred for units produced withing the production range.
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