Question

Kesterson Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.60 Direct labor $ 3.90 Variable manufacturing overhead $ 1.55 Fixed manufacturing overhead $ 27,900 Sales commissions $ 1.90 Variable administrative expense $ 0.60 Fixed selling and administrative expense $ 7,200 The incremental manufacturing cost that the company will incur if it increases production from 9,000 to 9,001 units is closest to:

Answer 1

Answer:

Incremental cost= $12.05

Explanation:

Giving the following information:

Direct materials $ 6.60

Direct labor $ 3.90

Variable manufacturing overhead $1.55

I will assume that the production level is between the relevant rage, therefore, fixed costs remain constant.

Incremental cost= total variable manufacturing cost

Incremental cost= 6.6 + 3.9 + 1.55

Incremental cost= $12.05