Bellucci Corporation has provided the following information: The incremental manufacturing cost that the company will incur if it increases production from 8,000 to 8,001 units is closest to (assume that the increase is within the relevant range):
A) $27.55
B) $13.00
C) $31.75
D) $25.50

Question

Bellucci Corporation has provided the following information:  The incremental manufacturing cost that the company will incur if it increases production from 8,000 to 8,001 units is closest to (assume that the increase is within the relevant range):
A) $27.55 
B) $13.00 
C) $31.75 
D) $25.50

Quizplus · Accepted Answer

To calculate the incremental manufacturing cost, we need to subtract the total cost of producing 8,000 units from the total cost of producing 8,001 units.

Total cost of producing 8,000 units: 
Fixed cost = $195,000 
Variable cost per unit = $22 
Total variable cost = 8,000 × $22 = $176,000

Total cost of producing 8,000 units = Fixed cost + Variable cost 
= $195,000 + $176,000 = $371,000

Total cost of producing 8,001 units: 
Fixed cost = $195,000 
Variable cost per unit = $22 
Total variable cost = 8,001 × $22 = $176,022

Total cost of producing 8,001 units = Fixed cost + Variable cost 
= $195,000 + $176,022 = $371,022

Incremental manufacturing cost = Total cost of producing 8,001 units - Total cost of producing 8,000 units 
= $371,022 - $371,000 
= $22

Therefore, the incremental manufacturing cost is $22, which is closest to option B) $13.00.

Bellucci Corporation Has Provided the Following Information: the Incremental