Johnston Company Wants to Double Production of Product X from 1,000

question 19

Multiple Choice

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 nonmanufacturing 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) $10,000
• B) $20,000
• C) $30,000
• D) $60,000

---

Definitions:

Warranty Obligations

Liabilities representing a company's responsibility to repair or replace products that fail to meet specified standards of performance.

Quarterly Entries

Financial records or transactions that are recorded or updated every three months within a fiscal year.

Quick Ratio

A financial indicator that measures a company’s ability to cover its current liabilities without relying on the sale of inventory.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.