Question

Johnston Company wants to double production of Product X from 1,000 units to 2,000 units. The variable manufacturing cost per unit is $10. The variable non manufacturing cost per unit is $20. There are no fixed costs. The selling price per unit is $50. What is the incremental cost of the proposed change?
A) $10,000B) $20,000C) $30,000
D) $60,000

Answer 1

Answer: C - $30,000

Explanation: Johnston Company wants to double production of Product X from 1,000 units to 2,000 units.

The variable manufacturing cost per unit is $10. The variable non manufacturing cost per unit is $20.

The selling price per unit is $50

To increase production by 1000 units

Total cost is $10 + $20 = $30

Total incremental cost = 1,000 * $30= $30,000