Question

Bellucci Corporation has provided the following information: Cost per UnitCost per Period Direct materials$6.70 Direct labor$3.50 Variable manufacturing overhead$1.20 Fixed manufacturing overhead $122,850 Sales commissions$1.15 Variable administrative expense$0.50 Fixed selling and administrative expense $44,100 The incremental manufacturing cost that the company will incur if it increases production from 10,500 to 10,501 units is closest to (assume that the increase is within the relevant range): Multiple Choice $26.10 $11.40 $28.95 $23.10

Answer 1

Answer:

The incremental manufacturing cost that the company will incur if it increases production from 10,500 to 10,501 units is closest to $11.40

Explanation:

It is important to note that the question requires The incremental manufacturing cost that the company will incur if it increases production from 10,500 to 10,501 units

From Production of 10500 units to 10501 units, there is an increment of 1 unit.

Lets find the incremental cost of 1 unit.

1.To do this we only consider variable manufacturing costs only.

2.Since increase is within the relevant range, the fixed manufacturing overheads do not change.

3.Also Ignore all non- manufacturing overhead as they do not form part of manufacturing costs.

                                                         Extra 1 Unit

Direct materials                                    $6.70

Direct labor                                           $3.50

Variable manufacturing overhead     $1.20

Total Cost                                             $11.40