What total incremental manufacturing cost will a company incur if it increases production from 10,000 to 10,001?

the Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows:

Amount Per Unit
Direct materials $ 6.00
Direct labor $ 3.50
Variable manufacturing overhead $ 1.50
Fixed manufacturing overhead $ 4.00
Fixed selling expense $

the Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows:

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

What total incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units?

I got $11 from adding the manufacturing costs that are variable, but I wonder why is it only $11? do we multiply it by 10,000 and 10,001? and why is it only VARIABLE manufacturing costs?

Other answer:

DEBS:
Assuming the direct labor is variable as well then I would say $11 is correct.

"Incremental" means cost of making just that one extra unit so you don't multiply it by anything.

You don't include fixed costs because those don't change regardless of how many you make. For example, your fixed overhead is there even if you make zero units. Typically that is your rent and other like things.

Based on your last couple questions, it seems like you might be getting incremental cost (how much does it cost to produce one more unit than you already are) vs average cost of goods sold. If you wanted to know the average then you'd add up all costs and divide by the total number of units sold.

Last Year'S Man:
I agree with your figure of $11. That is the marginal MANUFACTURING cost of making one extra unit. There is also a variable admin costs but that is not a manufacturing cost.
The business is using absorption costing to price it products, so that all the fixed costs are recovered by way of apportionment across each unit of production. The fixed costs are fully recovered over 10,000 units. Sometimes, when we increase production, we may need to buy more plant and machinery or get bigger premises so the fixed costs can go up in big step for a small increase in production. In this case, we are told they have capacity to manufacture up to 12,500 units so there is no extra fixed cost associated with making one more unit.
Andy L:
$11 is correct as the question is written, but you can query into variable administrative as it affects manufacturing.
Details:
incremental = marginal cost, that is the cost for one additional unit.
Manufacturing = production as the costs directly related to the product to get it to sell.

Direct materials $ 6.00 – Yes, $6.00 for the material for one unit
Direct labor $ 3.50 – Although real life manufacturing labor is a complex fixed-variable mix of step function for new hires and overtime pay for existing workers at their capacity or just idle time to working time, this example says to add the $3.50 as a labor per unit.
Variable manufacturing overhead $ 1.50 – This is also a far more complex in reality, but assumed here to vary by unit, so we add another $1.50
Fixed manufacturing overhead $ 4.00 – this is unaffected
Fixed selling expense $ 3.00 – This is unaffected
Fixed administrative expense $ 2.00 – This is unaffected
Sales commissions $ 1.00 – This is supposed to be a commission per unit so add the $1.00
Variable administrative expense $ 0.50 – This is also not a real life number as oversimplified, but as an example as variable per unit gets added also for $0.50

Therefore, first the end-to end cost of the one extra unit-
$6.00 materials, $3.50 direct labor, $1.50 variable manufacturing overhead, $1.00 commissions in sales, $0.50 administrative per unit and the total is $12.50

You need to consider what each item represents and how it should match to the cost of product.
Now, the question is only concerned with the cost of production, as stating MANUFACTURING COST.
$6.00 material is manufacturing, $3.50 Direct Labor is manufacturing, Manufacturing Overhead as variable is $1.50, sales commission is not manufacturing. Variable administrative expense is not defined as a breakdown of where it occurs. There is $11 clean, and a possible addition in the administrative, but here taken as zero.

The 10,000 and 10,001 are only important if 10,001 goes outside the Relevant Range of Production or if discussing total costs at each number.
These are unit costs, as costs that are affected by each item produced and sold on a per unit basis, and the 10,001 would be the multiplier, or the amounts multiplied by the number of units in the range of 7500 to 12500 at least, whether 8000 units or 9250 or 10001:
Direct materials $ 6.00, Direct labor $ 3.50, Variable manufacturing overhead $ 1.50
Sales commissions $ 1.00, Variable administrative expense $ 0.50

These are all costs not affected by the number of units sold or produced. We can return them to their original number by multiplying by the 10,000 units, as long as in the range of 7500 to 12500,
Fixed manufacturing overhead $ 4.00, Fixed selling expense $ 3.00, Fixed administrative expense $ 2.00
Fixed manufacturing overhead $40,000, Fixed selling expense $30,000 Fixed administrative expense $20,000
as using the 10,000 to get back to their true numbers.

You also have to categorize each as production(manufacturing), selling, or other overhead or administration.

To answer problems like this, you need a knowledge of arithmetic as accounting, a knowledge of the expense type as to what it is for, and a knowledge of variable versus fixed.

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