Question

A company's relevant range of production is 10,000 to 15,000 units. When it produces and sells 12,000 units, its unit costs are as follows: Amount per Unit Direct materials $ 8.25 Direct labor $ 5.50 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 5.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.00 Sales commissions $ 1.00 Variable administrative expense $ 0.50 What is the incremental cost incurred if the company increases production from 12,000 to 12,001 units

Answer 1

total incremental costs are: DM + DL + VMOH  8.25 + 5.5 + 1.5 = 15.25

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