The incremental manufacturing cost will martinez incur if it increases production from 10,000 to 10,001 units is: $11.
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First step is to calculate the Unit variable cost
Direct materials $6
Direct Labor $3.50
Variable manufacturing overhead $1.50
Unit variable cost $11
Second step is to determine the incremental cost:
Incremental cost of production = Unit variable cost × (Units increased)
Incremental cost of production = $11 × 1 unit
Incremental cost of production = $11
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Therefore the incremental manufacturing cost will martinez incur if it increases production from 10,000 to 10,001 units is: $11.
The complete question is:
Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table. What total incremental cost will Martinez incur if it increases production from 10,000 to 10,001 units?
Amount per unit ($)
Direct materials 6.00
Direct Labor 3.50
Variable manufacturing overhead 1.50
Fixed manufacturing overhead 4.00
Fixed selling expense 3.00
Fixed administrative expense 2.00
Sales commissions 1.00
Variable administrative expense 0.50
Therefore the incremental manufacturing cost will martinez incur if it increases production from 10,000 to 10,001 units is: $11.
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